Trump announces 100% chip tariff as Apple ups U.S. investment
On Friday, BMO Capital Markets maintained its positive stance on Costco Wholesale (NASDAQ:COST) shares, reiterating an Outperform rating and a $1,175.00 price target. BMO Capital’s analysis highlights Costco’s effective supply chain and dedicated membership base as key factors in its robust performance. According to InvestingPro data, Costco’s stock is currently trading above its Fair Value, with a market capitalization of approximately $460 billion and a P/E ratio of 59x.
Costco’s financial results for the third quarter of fiscal year 2025 were released, showing a 13% year-over-year increase in earnings per share (EPS), slightly surpassing consensus expectations. The company’s revenue grew by 8%, driven by a 16% rise in e-commerce sales and ongoing margin expansion. BMO Capital pointed out that Costco’s membership fee income and membership statistics remain strong, suggesting a stable consumer base. InvestingPro analysis reveals that Costco holds more cash than debt on its balance sheet and has maintained dividend payments for 22 consecutive years, though it currently operates with relatively modest gross profit margins of 12.8%.
The research firm believes that Costco is particularly well-equipped to navigate current economic conditions, including the challenges posed by tariffs. According to BMO Capital, Costco is expected to continue gaining market share in the near term. InvestingPro subscribers have access to 12 additional key insights about Costco’s financial health and market position, along with comprehensive Pro Research Reports that transform complex Wall Street data into actionable intelligence.
The price target of $1,175 set by BMO Capital is based on a 60x multiple of the forecasted fiscal year 2026 EPS of $19.50, which represents an 8% year-over-year growth. This valuation is notably higher than Costco’s 20-year historical average growth rate of 12%.
BMO Capital’s analysis emphasizes Costco’s solid fundamentals and the company’s potential for continued growth in a competitive retail landscape. Costco’s performance and strategic positioning have been recognized as factors that could contribute to its market share expansion and financial success in the coming year.
In other recent news, Costco Wholesale has reported impressive financial results, with an 8% increase in comparable sales, excluding gas and foreign exchange impacts, for the third quarter of fiscal year 2025. This performance exceeded consensus expectations, as highlighted by analysts from Bernstein, who also noted that Costco’s earnings per share (EPS) of $4.28 surpassed projections by $0.05. Loop Capital observed that Costco’s membership fee income rose by 10.4% during the quarter, aligning with their forecasts, while the company’s core same-store sales outperformed consensus estimates.
Raymond (NSE:RYMD) James maintained an Outperform rating, citing Costco’s robust membership trends and digital engagement as key factors in driving sales growth. Meanwhile, Barclays (LON:BARC) analysts acknowledged Costco’s strong market position, though they maintained an Equalweight rating due to valuation concerns. Truist Securities also maintained a Hold rating, despite raising the price target to $1,042, reflecting cautious optimism about Costco’s valuation.
Loop Capital slightly adjusted its price target to $1,110, maintaining a Buy rating and highlighting Costco’s ability to attract customers through its value proposition. Bernstein analysts raised their price target to $1,153, emphasizing Costco’s potential for global expansion but cautioning against the high valuation. Overall, these developments indicate that while Costco’s financial performance is strong, analysts remain mindful of valuation metrics and potential market risks.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.