Costco Wholesale’s recent earnings report has received positive feedback from Wall Street analysts. Initially, the company’s stock price fell as investors were disappointed by the lack of a membership fee increase. However, analysts believe that this could serve as a future catalyst. Truist analyst Scot Ciccarelli explains that due to Costco’s significant buying power and value offering, along with the potential for a membership fee increase in the future, they remain optimistic about purchasing the stock.
Despite the absence of a fee increase, analysts still see value in Costco’s stock. TD Cowen’s Oliver Chen highlights the consistent traffic and share gains in nonfood categories, leading him to raise his target price on the stock. BMO Capital Markets analyst Kelly Bania sets a new target price of $612, based on a price-to-earnings ratio of 36 times Costco’s forecast 2025 profit, without factoring in any uplift from a fee increase.
Costco appears to be navigating the current retail landscape well. The company is not facing the same pressures as other retailers, such as higher inventory shrink. Additionally, Costco’s low prices and high-quality products are shielding them from the decline in demand for more expensive items. William Blair analyst Phillip Blee notes that despite trading below its five-year average, Costco’s stock is still performing favorably. Overall, analysts believe that investors should not be worried about the lack of a membership fee increase and can be optimistic about Costco’s steady performance.
