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On Friday, DA Davidson reaffirmed its Neutral rating and $1,000.00 price target for Costco Wholesale (NASDAQ:COST), a prominent player in the Consumer Staples Distribution & Retail industry with a market capitalization of $460 billion. In their analysis, DA Davidson acknowledged Costco’s performance, noting a modest outperformance in both revenue and earnings for the third quarter of fiscal year 2025. According to InvestingPro data, the company has demonstrated strong momentum with a 24% total return over the past year. The company’s gross margin showed strength, which, however, was largely counterbalanced by an uptick in expenses.
Costco’s business model, known for its warehouse-style retailing, is expected to remain appealing to consumers, especially with potential tariffs on the horizon. The company is actively pursuing strategies to deliver value, which include optimizing sourcing and taking advantage of opportunistic purchasing scenarios.
DA Davidson highlighted a growing concern regarding the resurgence of inflation in non-food items, attributing it likely to the impact of tariffs. Despite this, there has been no significant indication of a reduction in consumer demand. DA Davidson suggests this could be due to Costco’s effective product selection, pricing strategy, and overall value proposition when compared to its competitors.
The firm’s stance is supported by a 52 times multiple of their projected earnings per share (EPS) for the calendar year 2026. Currently trading at a P/E ratio of 60.5, InvestingPro analysis indicates the stock is trading above its Fair Value. Costco’s consistent ability to navigate market challenges and maintain a competitive edge is reflected in DA Davidson’s maintained price target and rating. For deeper insights into Costco’s valuation and 14 additional exclusive ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Costco Wholesale has reported strong financial results for the third quarter of fiscal year 2025, with a 13% year-over-year increase in earnings per share and an 8% revenue growth, driven by a 16% rise in e-commerce sales. UBS analyst Michael Lasser affirmed a Buy rating with a price target of $1,205, citing Costco’s resilience and potential for continued growth despite economic uncertainties. BMO Capital Markets also maintained an Outperform rating with a $1,175 price target, highlighting Costco’s effective supply chain and strong membership base as key performance factors. Meanwhile, Truist Securities raised its price target to $1,042, maintaining a Hold rating due to concerns about Costco’s current valuation. Barclays (LON:BARC) increased its price target to $1,000, keeping an Equalweight rating, acknowledging the company’s robust trends and market share gains but expressing caution about potential economic risks. Loop Capital Markets slightly reduced its price target to $1,110 while reaffirming a Buy rating, noting Costco’s strategy of delaying cost increases to consumers as a factor in its market share growth. These developments reflect a generally positive outlook from analysts, with varying degrees of optimism about Costco’s future performance.
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