William L. Moore
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Why Ronnie Moas Is Running From Sothebys

Shares of Sothebys  seemed oversold when the market plummeted in January. On January 20, Standpoint Research’s Ronnie Moas initiated coverage of the stock with a Buy rating. Since that moment, the stock gained about 28 percent and 1570 bps versus the S&P 500. Given the recent and absolute move, Moas has now decided to downgrade his rating on the stock to Hold, arguing that the shares now seem reasonably valued.

Fundamentally, the company faces some challenges as well. While Moas acknowledged that there have been some strong auctions recently, he pointed out that, “the art market is slowing.” In addition, he highlighted the recent talent departures at Sothebys. “With those departures go important ties and relationships,” he noted.

In fact, management is projecting a difficult year, and is consequently using some excess cash to repurchase stock.

“I do not know what multiple the market will/could attach to BID EPS but I am a value guy and all I was looking for here was to catch a bounce off the oversold condition from January,” Moas explicated.

After the important rally seen in the market since the February lows, it seems like a good moment to “lock in gains,” the analyst continued. “I have a feeling Sell in May … and Go Away may work this year.”

Many stocks are still attractive at current valuations, 25 to 50 percent off their highs, Moas concluded. However, “but the S&P is overvalued by ~10% and that is a concern.”