On Friday, Bernstein SocGen Group updated its outlook on Costco Wholesale (NASDAQ:COST), raising the price target to $1,132 from the previous $1,062. The firm reiterated its Outperform rating on the stock, signaling confidence in the company's future performance. With the stock currently trading near its 52-week high of $1,007.80 and showing an impressive YTD return of over 50%, InvestingPro analysis indicates the stock is trading above its Fair Value.
Costco's first-quarter results for fiscal year 2025 aligned with market expectations, featuring a slight margin beat. The consistent monthly sales trends leading up to the report provided a clear picture of the company's performance. With a market capitalization of $440.72 billion and revenue growth of 5.02%, Costco maintains a strong market position.
Bernstein highlighted Costco's status as a top-quality company within its coverage, noting its long-term global expansion potential as a key factor underpinning its high valuation. InvestingPro subscribers can access 17 additional key insights about Costco's financial health, which is rated as GREAT by their comprehensive scoring system.
The analyst expressed optimism about Costco's ongoing success in attracting consumers across various categories. With a steady rate of new store openings both in the United States and internationally, Costco is expected to maintain a trajectory of growth for many years to come. This expansion strategy is seen as a significant driver of the company's enduring value.
Despite lagging behind its peers in digital and technological capabilities, Costco is advised to selectively integrate e-commerce into its business model. The analyst pointed out that Costco's high labor costs make it economically unfeasible to internalize same-day grocery delivery.
Instead, exploring retail media and marketplace opportunities at a careful pace could be beneficial, provided that it does not compromise the trust of its members. The company's strong financial position is evidenced by its 21-year track record of consistent dividend payments and robust P/E ratio of 59.65x. For a deeper understanding of Costco's valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.
Bernstein's revised price target of $1,132 reflects an updated valuation model and an increased price-to-earnings multiple to 53.2x on a next twelve months (NTM) basis, plus 1 P/E. This adjustment takes into account Costco's solid execution and potential for continued growth in the retail sector.
In other recent news, Costco Wholesale has seen considerable activity from financial analysts.
Evercore ISI raised its price target for Costco to $1,030, citing strong revenue of $254.45 billion and a track record of 21 consecutive years of dividend payments. Truist Securities also increased its price target for Costco to $935, following the company's robust sales trends and improved margins.
Morgan Stanley (NYSE:MS) raised its price target to $1,150, highlighting Costco's accelerating earnings momentum and potential for earnings growth. Deutsche Bank (ETR:DBKGn) increased its target for Costco to $1,096, expressing confidence in the company's ability to maintain revenue growth and expand margins. DA Davidson raised Costco's stock price target to $900, despite the stock's current high trading price.
Loop Capital increased its price target for Costco to $1,095, citing the retailer's ability to offer outsized value to its members.
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