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On Thursday, Mizuho (NYSE:MFG) analysts maintained their Neutral rating and $975.00 price target for Costco Wholesale stock (NASDAQ: COST), which currently trades at $1,051.69, near its 52-week high of $1,078.23. The decision comes as U.S. comparable sales, excluding gasoline, showed signs of deceleration in May, increasing by 5.5% compared to adjusted gains of 8.9% in April and 7.2% in March.
The analysts noted that despite the deceleration, the sales figures remain solid, with overall revenue growth at 5.94% and the company maintaining its position as a prominent player in Consumer Staples Distribution & Retail. However, they pointed out a relatively weaker trend, particularly in the non-foods segment, which faced tough comparisons. The non-foods category, which includes items like gold and gift cards, experienced a slowdown, trending in the mid-single-digit percentage range during the most recent fiscal third quarter.
International sales for Costco continued to perform well, with an 8.4% increase, excluding gasoline and foreign exchange effects. This marks a continuation of strong performance, with gains of at least 8% in the last two months. According to InvestingPro, Costco maintains excellent financial health with a score of 3.11 (GREAT), offering investors detailed insights through its comprehensive Pro Research Report, available along with 15+ additional ProTips.
The analysts cited the combination of these dynamics and Costco’s elevated valuation as reasons for maintaining their Neutral stance on the stock. They emphasized the challenges posed by the upcoming comparisons, which are expected to exceed 10% growth from the previous year for June through September.
Overall, while the company’s performance remains robust, the analysts are cautious due to the slowing sales momentum and higher leverage point for Costco’s business.
In other recent news, Costco Wholesale Corporation (NASDAQ:COST) reported a 6.8% increase in sales for May, reaching $20.97 billion, alongside a notable 11.6% rise in e-commerce sales. For the first 39 weeks of its fiscal year, net sales climbed 8% to $201.02 billion. Analysts at TD Cowen raised Costco’s stock price target to $1,175, citing strong customer traffic and sales momentum. Meanwhile, DA Davidson maintained a Neutral rating with a $1,000 target, acknowledging Costco’s revenue and earnings performance but noting increased expenses. UBS analyst Michael Lasser reaffirmed a Buy rating with a $1,205 target, highlighting Costco’s resilience and growth potential amid challenges. BMO Capital Markets also maintained an Outperform rating, setting a $1,175 price target, emphasizing Costco’s effective supply chain and strong membership base. These developments reflect Costco’s robust financial performance and strategic market positioning.
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