Text size

Wall Street praised Costco’s latest quarter.

Mario Tama/Getty Images

Costco

Wholesale stock slipped Friday, even as analysts heaped praise on the discounter’s fiscal third quarter.

Costco (ticker: COST) delivered better-than-expected results after the close of regular trading Thursday, although the stock traded down immediately following the report. In early Friday trading, the shares were off 1.9% to $380.22.

Still, while the market may not be enthusiastic about the pandemic winner’s quarter, plenty of analysts were—as indicated by several price target increases, both from bulls and those on the sidelines.

For the latest quarter, Costco earnings rose to $2.75 a share from $1.89 in the year-ago period, while total revenue climbed 21.5% to $45.28 billion. Analysts were looking for earnings of $2.38 a share on revenue of $44.71 billion.

Baird analyst
Peter Benedict
reiterated an Outperform rating and raised his target to $415 from $385. “The Costco model is firmly intact,” he writes, noting that the company gains market share and has the ability to keep thriving even as shoppers return to a more normalized environment.  

Cowen & Co.’s
Oliver Chen
reiterated an Outperform rating and raised his target to $440 from $410, writing that Costco is showing “impressive momentum into challenging comparison.” He also likes the investments the company is making in the business, differentiating itself from peers and driving value for shoppers.  

Deutsche Bank’s
Paul Trussell
reiterated a Hold rating but raised his target to $363 from $352. He calls the stock a “port in the storm,” while praising its “superb top-line performance.” He does, however, remain concerned about valuation and difficult comparisons to come.

Raymond James’s Bobby Griffin reiterated an Outperform rating and raised his target to $415 from $410. “Costco’s consistent store traffic, coupled with elevated ticket levels, reinforce the value Costco offers its members and our view that the membership model is still the most attractive business model in hardline retail today.”

Stifel’s Mark Astrachan reiterated a Buy rating and raised his target to $410 from $390, highlighting ongoing same-store sales strength: “while it will moderate given [comparisons], we anticipate share gains to continue.”

Telsey Advisory Group’s
Joseph Feldman
reiterated an Outperform rating and raised his target to $415 from $395. He applauds how proactive the company has been in dealing with potential supply chain disruptions and the company’s ability to pass inflation through to customers.

Costco stock has risen 1.2% year to date, and about 24% in the past 12 months.

Write to editors@barrons.com

Read More