Costco stock holds Buy rating at UBS on extended hours pilot

UBS reiterated its Buy rating and $1,205.00 price target on Costco Wholesale (NASDAQ:COST) Wednesday, citing the retailer’s pilot program for extended shopping hours as evidence of continued growth potential. According to InvestingPro data, analysts’ price targets for Costco range from $620 to $1,225, with the company maintaining strong revenue growth of 5.94% over the last twelve months.

The wholesale club recently announced it would test extended hours exclusively for Executive members, a move UBS views as demonstrating the company still has "ample tricks up its sleeve" despite concerns about its premium valuation.

Costco currently trades at approximately 51 times next-twelve-months price-to-earnings ratio, a multiple some investors worry is unsustainable given the company’s long-running success.

UBS noted Costco might experience "a moderation in its sales in the coming months" as benefits from high-volume precious metals and gift card sales begin to taper off.

These product categories have contributed significantly to Costco’s "outsized growth" over the past year, according to UBS’s analysis of the retailer’s performance.

In other recent news, Costco Wholesale reported a 6.8% increase in May sales, reaching $20.97 billion, compared to $19.64 billion in the same period last year. The company’s net sales for the first 39 weeks of its fiscal year rose 8.0% to $201.02 billion. E-commerce sales were a significant growth driver, with an 11.6% increase for the four-week period. Analysts from TD Cowen raised Costco’s stock price target to $1,175, citing strong traffic and sales momentum. Meanwhile, Loop Capital also increased its price target to $1,170, noting robust international same-store sales growth. Mizuho (NYSE:MFG) maintained a Neutral rating with a $975 target due to a slowdown in U.S. comparable sales. DA Davidson also held a Neutral rating with a $1,000 target, recognizing Costco’s solid performance despite rising expenses. These developments reflect Costco’s ongoing efforts to maintain market share and consumer demand amidst varying economic conditions.

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