Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - Mizuho lowered its price target on Costco Wholesale (NASDAQ:COST) to $950.00 from $975.00 on Thursday, while maintaining a Neutral rating on the membership warehouse retailer. The stock, currently trading at $914.80, sits between analysts’ targets ranging from $620 to $1,218, with InvestingPro data showing the company’s current valuation appears stretched relative to its growth metrics.
The price target adjustment follows Costco’s September sales report, which showed U.S. comparable sales growth (excluding gas) of 5.0% for the period ending October 5. This represents a slowdown from August’s 6.7% growth and July’s 6.5% increase. The company’s overall revenue growth stands at 8.17% over the last twelve months, according to InvestingPro data, which offers 15+ additional key insights about Costco’s performance metrics.
Core two-year sales trends decelerated to 12.3% when excluding the 200 basis point lift from hurricane-related demand last year. This compares to two-year gains of 13.4% in August and 12.8% in July.
Despite the moderation in growth rates, Mizuho noted that Costco "continues to execute at a high level," highlighting that the retailer’s expanded operating hours are delivering "early, yet meaningful results."
The firm indicated it awaits "further evidence of moderating expense growth" and subsequent room for consensus estimates to move higher before taking a more positive stance on the stock.
In other recent news, Costco Wholesale Corporation reported impressive September sales figures, exceeding analyst expectations. The company announced net sales of $26.58 billion for the month, marking an 8.0% increase from the previous year. Total comparable sales grew by 5.7%, surpassing the anticipated 4.6% growth, with U.S. sales rising by 5.1% and international markets showing even stronger performance. Despite this strong growth, Guggenheim has maintained a Neutral rating on Costco, citing a slight decrease in membership renewal rates. Meanwhile, Truist Securities adjusted its price target for Costco to $1,033, down from $1,042, due to valuation concerns, although they acknowledged the robust 6.4% core comparable sales growth. These developments highlight Costco’s ongoing sales momentum and the varied analyst perspectives on its stock performance.
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