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On Monday, Citi analyst Paul Lejeuz revised the price target on Costco Wholesale (NASDAQ:COST) to $927.00, down from the previous $1,060.00, while maintaining a Neutral rating on the stock. The retail giant, currently valued at over $403 billion, trades at a P/E ratio of 52.7, reflecting premium market expectations. According to InvestingPro analysis, the stock is currently trading above its Fair Value. Following a visit to Costco’s headquarters in Issaquah, Washington, for a one-on-one meeting with CFO Gary Millerchip and a subsequent warehouse club tour, the analyst reported gaining insights that increased his optimism about the company’s business.
Lejeuz highlighted that Costco is well-positioned in the short term, should consumer demand weaken or the tariff situation worsen. Over the long term, he believes that Costco already operates a winning retail model, evidenced by its impressive $264 billion in revenue and 22 consecutive years of dividend payments. The focus for the company is on growing its membership base and the number of units, as well as incorporating data and technology advancements to drive further improvements. InvestingPro data reveals strong financial health scores and robust cash flows, supporting the company’s growth initiatives.
The analyst expressed confidence in Costco’s ability to gain market share under any circumstances. However, the adjustment in the price target to $927 reflects a shift to align with lower comparative valuations. This new target is based on 47 times the projected earnings per share for the fiscal year 2026.
Despite recognizing Costco as a high-quality business where buying the dip could be favorable, Lejeuz noted that the company’s shares continue to trade at a substantial premium compared to their 5-year and 10-year historical valuations. He suggested that a more attractive entry point could emerge in the future, advising investors to remain Neutral for the time being. For deeper insights into Costco’s valuation and growth prospects, investors can access comprehensive analysis and 12+ additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Costco Wholesale has reported its second quarter 2025 financial results, which exceeded consensus revenue estimates but fell short on profit margins and membership fee income. The company acknowledged that tariffs impact the cost of some of its merchandise, particularly due to government actions in China, Canada, Mexico, and the US. In response to US tariffs, Costco is urging its suppliers in mainland China to lower prices, a move that mirrors actions by other major retailers like Walmart (NYSE:WMT). This development comes amid heightened trade tensions, with tariffs on Chinese goods increased to 20% this month by the US administration.
Analyst firms have weighed in on Costco’s performance, with Bernstein raising its price target to $1,177 and maintaining an Outperform rating, citing Costco’s strong consumer appeal and expansion potential. UBS also maintained a Buy rating with a $1,205 price target, highlighting Costco’s resilience and consistent sales growth despite challenging conditions. Meanwhile, DA Davidson reiterated a Neutral rating with a $1,000 price target, noting the competitive landscape and Costco’s strategic expansion efforts.
Costco’s recent opening of its 900th club in Sharon, Massachusetts, reflects its ongoing growth strategy, with plans for further expansion in the region. The company continues to attract consumers with its membership-based model and value proposition, even as it navigates complex trade dynamics and competitive pressures in the retail sector.
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