Stifel raises Costco stock price target to $1,075, maintains Buy rating

On Wednesday, Stifel analysts increased their price target on Costco Wholesale (NASDAQ:COST) shares to $1,075 from the previous target of $1,000, while reiterating a Buy rating on the stock. The adjustment came after Costco reported significant growth in its January comparable sales figures, surpassing consensus estimates. According to InvestingPro data, Costco’s stock is trading near its 52-week high of $1,043.09, with an impressive 30.24% return over the past six months. Current analysis suggests the stock is trading above its Fair Value, reflecting the market’s strong confidence in the company’s growth prospects.

Costco’s total and U.S. core comparable sales for January showed an increase of 9.8% and 9.2%, respectively, which notably exceeded the consensus projections of 6.7% and 6.5%. When compared on a two-year basis, the figures were slightly better than the averages for the year 2024. The company’s robust performance is reflected in its financial metrics, with annual revenue reaching $258.81 billion and a solid 5.35% revenue growth rate. InvestingPro subscribers can access 15+ additional key metrics and insights about Costco’s financial health, which currently rates as "GREAT" according to comprehensive analysis. The company saw low-double-digit growth in its Non-Foods and Fresh Foods categories, with Fresh Foods showing a sequential acceleration and Non-Foods reflecting strong performance in discretionary categories.

The growth in the Food & Sundries sector was high single-digit, which was a modest improvement over recent months. The robust overall food comparable sales growth suggests that Costco is continuing to capture a significant share of the grocery market. Additionally, a 7% increase in traffic during January indicates that Costco’s value proposition is resonating well with its members.

In light of these positive developments, Stifel has also raised its F2025-F2026 EPS estimates for Costco. The new price target of $1,075 is based on 34 times the forecasted F2026 EBITDA. Stifel’s analysts suggest that, all else being equal, it would be preferable to add to positions in Costco on any market weakness, particularly given the stock’s recent strong performance. With 13 analysts recently revising their earnings estimates upward and a current P/E ratio of 60.92x, investors seeking deeper insights can access Costco’s comprehensive Pro Research Report, available exclusively on InvestingPro, which provides detailed valuation analysis and growth projections.

The analysts believe that Costco’s premium performance and its potential to continue outperforming, even if inflation were to rise, justify a premium multiple for the stock. They underscore Costco’s status as a top-performing company with a value proposition that continues to attract customers.

In other recent news, Costco Wholesale Corporation reported a significant 9.2% increase in January sales, reaching $19.51 billion. Over the first 22 weeks of their fiscal year, the company’s net sales climbed 8.2%, totaling $113.55 billion. E-commerce continued to be a strong growth driver for Costco, with a 13.6% increase in comparable sales for the month and a 16.6% rise over the 22-week period.

In executive changes, Costco announced the retirement of Richard Galanti, the company’s Executive Vice President. The company has not publicly named a successor for Galanti’s position on the Board of Directors or as Executive Vice President.

Analysts from Bernstein and Truist Securities maintained their respective Outperform and Hold ratings on Costco’s stock. Bernstein highlighted the company’s potential for further international expansion as a crucial element of its long-term growth strategy. Truist Securities, while acknowledging the company’s strong sales performance, expressed caution regarding the current valuation of Costco’s stock.

S&P Global Ratings upgraded Costco to an ’AA’ rating from ’A+’ based on its strong performance and low leverage. The company’s international expansion has been successful, with non-U.S. revenue increasing by about $30 billion or 70% compared to 2019, reaching approximately $70 billion in 2024. Costco’s consistent same-store sales growth and increasing margins were also noted as contributing factors to the rating upgrade.

These are recent developments that reflect the ongoing activity and performance of Costco Wholesale Corporation.

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