The Wall Street Journal’s John Jannarone is looking for reasons not to abandon Sotheby’s stock after a run to near record highs:

some investors have worried that the art market has lost the momentum needed to keep impressive profit growth at Sotheby’s on course.

Before writing Sotheby’s off, investors should remember that quarterly results may belie a perfectly healthy art market. After all, the key to Sotheby’s earnings is total auction revenue, which had previously been boosted by ultraexpensive works such as those by Pablo Picasso and Alberto Giacometti. The absence of such blockbusters helps explain softer sales in recent weeks. […]

One other worry: Even if the art boom continues, Sotheby’s will lose out to Christie’s if the latter sacrifices margins for market share. But while Christie’s is closely held, it ultimately needs to consider profit and would suffer by consistently undercutting its longtime rival on commissions.

Fine art is a volatile business, and big swings in Sotheby’s stock are likely to happen again. But without a stronger sign the art market has cracked, it is probably early to walk out of the Sotheby’s show.

It Is Too Soon to Walk Out on Sotheby’s Stock (Wall Street Journal)