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On Friday, Raymond (NSE:RYMD) James analyst Bobby Griffin reaffirmed an Outperform rating and a $1,070.00 price target for Costco Wholesale (NASDAQ:COST) stock. Following the company’s third-quarter fiscal year 2025 results, Griffin expressed continued confidence in Costco’s performance, highlighting the company’s adjusted earnings per share (EPS) which surpassed expectations and a robust comparable store sales growth of 8.0% year-over-year, excluding gas and foreign exchange impacts. According to InvestingPro data, Costco currently trades at a P/E ratio of 58.8x and appears overvalued compared to its Fair Value, with analyst targets ranging from $610 to $1,225.
The positive assessment was bolstered by Costco’s strong membership trends, including increased executive membership penetration and digital engagement. These factors are seen as driving a deeper share of wallet and sustaining high renewal rates. Griffin noted that despite Costco’s stock valuation rising by 25% over the past 12 months, outperforming the S&P 500’s 12% gain, the premium is justified. This is attributed to Costco’s consistent operational execution, a defensive mix of product categories, and robust member loyalty.
Looking forward, Raymond James anticipates Costco to continue its expansion with an estimated 25 net new store openings annually. The company is also expected to gain broader market share in both food and non-food segments, with ample room for reinvestment and returning capital to shareholders. Costco’s supply chain strengths, solid vendor relationships, and pricing strategies position it favorably to manage tariff-related pressures. The company’s revenue growth remains solid at 5.9% year-over-year, with total revenue reaching $268.8 billion in the last twelve months.
In the context of a potentially inflationary economic environment, Griffin suggests that Costco’s business model, which leverages value and scale, could become increasingly attractive to consumers. Costco is seen as a "core long-term compounder" that is well-equipped to thrive regardless of macroeconomic conditions. InvestingPro data reveals that Costco has maintained dividend payments for 22 consecutive years, with a recent dividend yield of 0.52% and impressive dividend growth of 27.45% over the last twelve months. For deeper insights into Costco’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Costco Wholesale Corporation reported its Q3 2025 earnings, revealing a net income of $1.9 billion, marking a 13% increase year-over-year. Despite surpassing earnings per share (EPS) expectations with $4.28, revenue fell short at $61.96 billion against a forecast of $63.11 billion. The company experienced 8% comparable sales growth, excluding gas and foreign exchange impacts. Membership fee income rose by 10.4%, contributing significantly to the company’s financial performance. Costco opened nine new warehouses in Q3 and plans to open 10 more in Q4, reflecting its ongoing expansion strategy. In response to these results, Bernstein analysts raised Costco’s stock price target from $1,148.00 to $1,153.00, maintaining an Outperform rating. They highlighted Costco’s potential for global expansion but noted the high valuation of its stock. The analysts expressed cautious optimism, pointing out potential risks if sales growth decelerates.
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