The outcome of Sotheby's auction of new works by Damien Hirst is crucial to the overall confidence of the contemporary art market, according to a report published yesterday by the research company ArtTactic.

The research was compiled by the London-based company's founder, Anders Petterson, before the "Beautiful Inside My Head Forever" sale of material from Mr. Hirst's studio, which Sotheby's expects to fetch at least $117 million.

Mr. Petterson examined how Mr. Hirst's works have performed at auction over the last four years since Sotheby's October 2004 "Pharmacy" sale. That auction of the contents of the artist's defunct Notting Hill restaurant made $19.8 million, more than double the $8.74 million top estimate.

According to ArtTactic's report, if Sotheby's 223-lot sale in London on September 15 and 16 raises $150 million, it will match the total achieved from all of Mr. Hirst's auction sales between 2000 and 2008. If it performs below expectations, it could "signal a wider contemporary art market in decline," the report said.

"It's a very important event," Petterson said in a telephone interview. "It will set the tone for the autumn season of contemporary auctions and potentially further than that."

ArtTactic predicted that the Hirst sale would perform well. In a poll it conducted among 51 market insiders, 78% felt the total would fall within Sotheby's estimate range, said the report.

"I'd be surprised if Sotheby's didn't sell at least 85% of the lots," the New York-based art adviser Todd Levin, director of the Levin Art Group, said in a telephone interview, when asked to comment on the report.

Since October 2004, the auction market for Mr. Hirst's work has seen an increase in average prices of 207% (or a 39% annual compound return), said the ArtTactic report. In June 2007, Sotheby's London sold Mr. Hirst's "Lullaby Spring" for a record $17.3 million with fees to the Emir of Qatar, said the Art Newspaper.

Last week, Sotheby's courted new international buyers for Mr. Hirst's work by holding VIP previews for the sale in the Hamptons and New Delhi. The artist himself did not attend either of these events.

ArtTactic said that the August 23 report in the Art Newspaper stating that Mr. Hirst's dealer, White Cube, was holding more than 200 unsold works in stock has the potential to upset his market. White Cube, in an e-mailed statement to Bloomberg News on August 26, denied that it had a "mountain" of unsold material.

"Hirst would do himself a favor in the long-term," the report said, "by being transparent about his level of production. Keeping the market in the dark will only undermine the future confidence in his market."