Bernstein lowers Costco stock price target to $1,134 on valuation pullback

Investing.com - Bernstein lowered its price target on Costco Wholesale (NASDAQ:COST) to $1,134.00 from $1,140.00 while maintaining an Outperform rating. This target remains below the highest analyst price target of $1,218 but significantly above the current trading price of $928.04.

The firm noted that Costco’s valuation has pulled back meaningfully from the mid-50s price-to-earnings ratio to the mid-40s range, though it remains at a premium level. InvestingPro data shows Costco currently trades at a P/E ratio of 50.9 and a PEG ratio of 5.1, confirming the stock is trading at a high earnings multiple relative to near-term growth expectations.

Despite the reduction in price target, Bernstein’s long-term discounted cash flow analysis suggests a potential upside of nearly 30%, supported by Costco’s international growth opportunities. This optimistic view comes despite InvestingPro’s Fair Value assessment indicating the stock is currently overvalued, though Costco has maintained impressive revenue growth of 8.17% over the last twelve months.

The research firm highlighted that Costco’s U.S. comparable sales have stabilized in the mid-single-digit to high-single-digit percentage range, even while facing challenging year-over-year comparisons.

Bernstein indicated that increased investor interest could provide support for Costco’s stock price at current levels despite the slight reduction in price target.

In other recent news, Costco Wholesale’s earnings and revenue have been a focal point for analysts. UBS maintained a Buy rating with a $1,205 price target, highlighting the company’s strong performance despite a slowdown in September sales. DA Davidson also commented on this slowdown, maintaining a Neutral rating with a $1,000 price target, as Costco’s comparable sales growth decreased to 5.7% in September from 6.3% in August. Meanwhile, Oppenheimer lowered its price target to $1,050 from $1,130 but kept an Outperform rating, adding Costco back to its top pick ranking. Bernstein reiterated an Outperform rating with a $1,140 price target, noting the retailer’s challenges with year-over-year comparisons, particularly in gift card and gold sales. BTIG initiated coverage with a Buy rating and a $1,115 price target, emphasizing Costco’s customer loyalty as a key driver for growth. These analyst insights reflect a mixed but generally positive outlook on Costco’s recent performance and future prospects.

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