Ahead of the Bell: Analysts see flat online sales

Marketers call the Monday after Thanksgiving Cyber Monday because it is believed that shoppers use faster Internet connections at their jobs to make online purchases. Some consumers began surfing for gifts early--ComScore, an Internet research company, reported Sunday that online spending was up 2 percent on Thanksgiving Day and Friday, compared with a year ago.

Flat e-commerce sales this year would break a long streak of double-digit year-over-year sales increases for online retailers. According to early estimates from the National Retail Federation, shoppers spent about 7 percent more on average this year during the Thanksgiving weekend, but most offered deep discounts to lure shoppers through their doors and sales momentum is expected to slow.

The ComScore data indicate that the "sky is not falling" and that online retailing has some resilience in the economic downturn, wrote Jefferies & Co. analyst Youssef Squali in a Monday morning note to clients.

If the trend holds through the end of the year, it's a positive for Google Inc. Amazon.com Inc. and eBay Inc., Squali wrote.

J.P. Morgan analysts conducted their own survey of 766 consumers and found that while most of them expected to cut overall holiday spending, online spending would be roughly flat.

Amazon is emerging as a clear leader in the field, with nearly 50 percent of respondents saying they planned to shop there, the analysts wrote. But the Web sites of Wal-mart Stores Inc. and Target Corp. also look set to pick up some business.

At Friedman Billings Ramsey, analyst Heath Terry reinitiated coverage of Amazon with a "Market Perform" rating and a $45 price target.

"We believe that Amazon is well positioned to continue to take share in online retail, benefit from the shift of retail dollars online, and over time drive margin expansion," Terry wrote.

At the same time, the share gains are unlikely to completely offset the overall decline in consumer spending, he said, and recommended that investors stay on the sidelines.