Shares of QXL.com, a European online auction house, more than doubled this morning after an investment bank set a dizzying two-year price
target of $333 per share--more than ten times its current price.
The company's American Depository Shares (ADS), which closed yesterday at
$22.33, rose $37.69, or 168 percent, to $60 after SG Cowen started coverage
on QXL.com with a "strong buy." QXL.com trades on the Nasdaq Stock Market and the London Stock Exchange.
The stock soared as much as 330 percent at one point this morning, largely
because of confusion about the price target set by SG Cowen. The investment
firm, which helped manage QXL.com's securities offering, published the target price at $1,000, but QXL.com announced a 3-for-1 stock split today. Post-split, the target price is about $333 per share.
SG Cowen analyst Thomas Bock compared QXL.com's potential in Europe to the
meteoric rise of online auctioneer leader eBay in the United States. Like
eBay, the company offers person-to-person auctions as well as merchant-to-consumer auctions and business auctions.
"QXL.com is the leading auctioneer in Europe, a still relatively nascent, but rapidly expanding, market," wrote Bock. The analyst noted that the
company represents a "unique combination of large potential market
opportunity, defensibility, first-mover advantage and attractive business
Bock also wrote that research shows that the growth rate of consumers using online auction sites and e-commerce spending in Europe is likely to exceed that of the U.S. market over the next few years.
Defending his price target, Bock wrote: "Did we think two years ago that
eBay would be a $25 billion company?
"If QXL.com does hold on to its leading position in the space and on the
longer term successfully expands beyond Europe, then we believe, due to the
size of the potential market, QXL.com could actually achieve valuations in
excess of $25 billion."