Loop Capital lifts Costco stock target to $1,150, maintains Buy

On Thursday, Loop Capital Markets adjusted its outlook on Costco Wholesale (NASDAQ:COST), increasing the price target from $1,095 to $1,150, while reiterating a Buy rating on the company’s shares. The revision comes in response to Costco’s reported January sales figures, which exceeded analyst expectations. The wholesale giant, currently valued at $463 billion, trades at a P/E ratio of 61, reflecting investor confidence in its growth prospects. According to InvestingPro data, eight analysts have recently revised their earnings estimates upward for the upcoming period.

Costco recently announced a core comparable sales growth of 10%, surpassing the consensus estimate of 7%. Despite foreign exchange (FX) rates negatively impacting the company’s international segments, both segments still achieved double-digit core growth. Gas inflation contributed a modest 10 basis points to the overall comparable sales, but this was more than offset by a -2.4% impact from FX. This marks a slight improvement from the 250 basis points impact from gas and FX seen in December. The company’s strong performance is reflected in its stock price, which is trading near its 52-week high of $1,043.09, with impressive returns of 28% over the past six months.

The strong performance in January was supported by robust growth in both the fresh food and non-food categories, which saw low double-digit increases. Loop Capital’s analyst highlighted the value offered by Costco as a key factor driving increased customer traffic to its clubs. While the company maintains a relatively modest gross profit margin of 12.7%, its annual revenue has reached an impressive $259 billion. For deeper insights into Costco’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro, which offers exclusive ProTips and detailed metrics for informed decision-making.

Loop Capital’s forecast for Costco’s fiscal year 2025 earnings per share (EPS) stands at $19.72, which is $1.59 higher than the consensus. The price target of $1,150 is underpinned by a discounted net operating profit after tax (NOPAT) model, suggesting continued confidence in the wholesale giant’s financial prospects. Investors can mark their calendars for March 6, 2025, when Costco is scheduled to report its next earnings.

In other recent news, Costco Wholesale has been in the spotlight with significant developments. The company reported a notable 9.2% increase in its January sales figures, with net sales reaching $19.51 billion. This indicates a steady growth trajectory, with an 8.2% climb in net sales over the first 22 weeks of their fiscal year.

Stifel analysts have responded to these positive results by raising their price target on Costco shares to $1,075, maintaining a Buy rating. This adjustment comes after Costco’s January comparable sales figures surpassed consensus estimates, showing an increase of 9.8% in total and 9.2% in U.S. core comparable sales.

In other developments, the company announced the retirement of Richard Galanti, the Executive Vice President. The company has yet to publicly name a successor for Galanti’s position. Meanwhile, Bernstein analysts have maintained their Outperform rating on Costco, underpinned by the retailer’s potential for further international expansion.

In a significant move, S&P Global Ratings upgraded Costco’s credit rating to ’AA’ from ’A+’ due to its strong performance and low leverage. This upgrade reflects the company’s solid operating track record, consistent credit metrics, and the success of its membership model. These recent developments indicate a positive trend for Costco, highlighting its strong financial performance and strategic growth plans.

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