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Investing.com - BMO Capital reiterated its Outperform rating and $1,175.00 price target on Costco Wholesale (NASDAQ:COST) stock on Monday. The stock, currently trading at $995.46, has shown strong momentum with a 16% return over the past year. According to InvestingPro data, Costco commands a substantial market cap of $441 billion and maintains robust financial health with an overall score of "GOOD."
The research firm highlighted three recent major announcements by Costco that enhance its membership value proposition. These include a new perk on same-day Instacart (NASDAQ:CART) orders funded by Instacart for Executive members, extended shopping hours primarily for Executive members, and a new standalone gas station test. The company's focus on membership value is reflected in its impressive annual revenue of $269 billion and consistent dividend payments maintained for 22 consecutive years.
BMO Capital emphasized that these new benefits and perks strengthen Costco's "extreme membership value proposition," particularly for its Executive membership base. This tier represents 47% of Costco members but generates 73% of the company's sales.
The firm stated that these enhancements further strengthen Costco's competitive moat and support its premium valuation in the market. The initiatives focus on rewarding the retailer's highest-value customers with additional conveniences and services.
BMO Capital continues to list Costco as a "Top Pick" in its coverage universe, maintaining both its Outperform rating and $1,175 target price for the wholesale retailer's shares. For deeper insights into Costco's valuation and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 14 additional ProTips and detailed financial metrics in the Pro Research Report.
In other recent news, Costco Wholesale Corporation reported a 6.8% increase in May sales, reaching $20.97 billion, with e-commerce sales up 11.6%. For the first 39 weeks of the fiscal year, net sales rose 8.0% to $201.02 billion. UBS maintained a Buy rating on Costco, citing the company's pilot program for extended hours as a sign of growth potential, despite concerns about its valuation. Loop Capital also raised its price target for Costco to $1,170, driven by strong international same-store sales growth that exceeded expectations. Mizuho (NYSE:MFG) analysts maintained a Neutral rating, noting a slowdown in U.S. comparable sales, particularly in the non-foods segment. However, they acknowledged strong international sales performance. TD Cowen increased Costco's price target to $1,175, highlighting consistent traffic growth and competitive pricing strategies. The analysts noted that Costco's digital initiatives and trusted non-food deals contribute to its sustained market position.
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