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On Friday, BMO Capital Markets maintained a positive outlook on Costco Wholesale (NASDAQ:COST) shares, reiterating an Outperform rating and a price target of $1,175.00. According to InvestingPro data, Costco currently trades at a P/E ratio of 60.1x, with analyst targets ranging from $560 to $1,205. The company’s current market capitalization stands at approximately $456 billion, making it a prominent player in the Consumer Staples sector. The firm’s analyst, Kelly Bania, provided insights following the release of the company’s financial results for the second quarter of fiscal year 2025. Although Costco’s earnings per share (EPS) for the quarter were slightly below the consensus estimates, Bania attributed this to a larger-than-expected foreign exchange (FX) impact on earnings before interest and taxes (EBIT). However, even with the FX headwind, EBIT grew by 12% and, excluding FX effects, by 15%. InvestingPro analysis shows the company maintains strong financial health with an overall score of ’GOOD’, supported by robust revenue growth of 5.35% over the last twelve months and total revenue reaching $258.8 billion.
Costco’s sales were not significantly impacted by FX, aligning with forecasts. The company’s top-line results continued to be strong and consistent, with membership renewal rates and growth reaching record levels. Despite announcing annual wage investments and experiencing a decline in core gross margin percentage (GM%), Bania noted that their model had already accounted for the reinvestment stemming from the membership fee increase.
The analyst emphasized Costco’s robust performance, highlighting that the company remains one of BMO Capital’s top picks in the retail sector. Bania’s assessment suggests confidence in Costco’s business model and its ability to maintain strong financial metrics, despite the challenges posed by foreign exchange fluctuations and investment in employee wages. The $1,175 price target set by BMO Capital indicates a belief in the stock’s potential for growth and a positive long-term outlook for the company. InvestingPro subscribers can access 14 additional key insights about Costco, including detailed analysis of its financial health, valuation metrics, and growth prospects through the comprehensive Pro Research Report, which transforms complex Wall Street data into actionable intelligence.
In other recent news, Costco Wholesale Corp (BVMF:COWC34). reported its financial results for the second quarter of fiscal year 2025, posting revenue of $63.72 billion, which exceeded forecasts by $690 million. However, the company’s earnings per share (EPS) of $4.02 fell short of analyst expectations of $4.09. Despite the mixed performance, Costco’s membership fee income rose by 7.4%, and e-commerce sales surged by 20.9%. Analyst firms have adjusted their positions on Costco in response to these developments. Jefferies increased the price target for Costco shares to $1,180, citing strong comparable store sales and membership fee growth. Meanwhile, Loop Capital Markets lowered its price target to $1,135 but maintained a Buy rating, noting the retailer’s robust sales despite challenges in margin expansion. Raymond (NSE:RYMD) James reiterated an Outperform rating with a $1,070 price target, highlighting Costco’s solid sales performance and membership trends. Evercore ISI also raised its price target to $1,100, emphasizing the company’s strong membership base and financial performance. These recent developments reflect analysts’ confidence in Costco’s ability to navigate current challenges and maintain growth.
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