Bernstein reiterates Outperform rating on Costco stock, citing Kirkland brand strength

Investing.com - Bernstein SocGen Group has reiterated an Outperform rating on Costco Wholesale (NASDAQ:COST) with a price target of $1,153.00, highlighting the company’s growth potential despite its premium valuation. The retail giant, currently trading at $950.95, has demonstrated strong performance with a 14% return over the past year and maintains a "GOOD" overall financial health score according to InvestingPro analysis.

The firm acknowledges Costco trades at approximately 49 times forward earnings, representing more than a 2.1 times premium to the broader market, but argues this valuation is justified by the company’s sustained earnings growth trajectory. Recent data shows the company generated $268.8 billion in revenue with a 5.9% growth rate, though InvestingPro analysis suggests the stock is trading above its Fair Value.

Bernstein identifies Costco’s Kirkland Signature private label as a crucial component of the retailer’s value proposition, noting the brand’s strategy of offering quality products at approximately 20% below name-brand alternatives across multiple categories including gasoline, paper products, and prepared foods.

The research firm’s consumer survey reveals strong brand recognition for Kirkland Signature, with only 18% of American consumers reporting they had never heard of the brand and over 40% purchasing it frequently, making it the fourth most recognized private label in the market.

Looking ahead, Bernstein expects international markets to drive Costco’s store and membership growth, with the Kirkland Signature brand playing a key role in both acquiring new members and maintaining the company’s high customer loyalty rates in these markets.

In other recent news, Costco Wholesale Corporation announced a quarterly cash dividend of $1.30 per share, payable on August 15, 2025, to shareholders of record as of August 1, 2025. The company reported June 2025 sales of $26.4 billion, marking an 8.0% year-over-year increase, driven by comparable sales growth of 5.8% and the addition of 25 new warehouses. Truist Securities maintained its Hold rating on Costco, citing the stock’s valuation at approximately 51 times calendar year 2025 earnings per share. Meanwhile, William Blair reiterated its Outperform rating, highlighting the sales rebound in June. Mizuho (NYSE:MFG) kept its Neutral rating, noting steady June sales and emphasizing Costco’s international growth, particularly in Canada and other regions. JPMorgan reiterated its Overweight rating, pointing out that Costco’s June sales exceeded expectations, especially in international markets. E-commerce sales also grew by 11.2%, excluding foreign exchange impacts. These developments reflect Costco’s ongoing expansion and strong performance across various segments.

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