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On Monday, TD Cowen analysts raised the price target for Costco Wholesale stock (NASDAQ:COST) to $1,175 from $1,100, maintaining a Buy rating. The analysts highlighted Costco’s consistent traffic growth of 5-6% and comparable sales momentum of 6-8% as key factors in their decision. The company’s stock has delivered impressive returns, with a 29.1% gain over the past year and 13.8% year-to-date. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with a P/E ratio of 59x.
The analysts emphasized Costco’s competitive pricing strategy on essential items like eggs, dairy, and butter, which plays a significant role in driving customer traffic. Additionally, they noted the strong consumer preferences for the Kirkland brand, which accounts for approximately 30% of Costco’s sales mix. With revenue growth of 6.13% in the last twelve months and a 22-year track record of consistent dividend payments, Costco demonstrates strong financial stability. InvestingPro subscribers can access 12 additional key insights about Costco’s financial health and growth prospects.
Non-food deals, which represent around 25% of the sales mix, are also highly trusted by consumers, according to the analysts. They believe these factors contribute to Costco’s sustained sales momentum and market position.
The report also mentioned Costco’s digital enhancements, which include initiatives like CostcoNext Marketplace, retail media, and Costco Logistics. These efforts are seen as margin accretive and loyalty-centric, further supporting the company’s growth prospects.
In other recent news, Costco Wholesale reported a strong financial performance for the third quarter of fiscal year 2025, with a 13% year-over-year increase in earnings per share and an 8% growth in revenue. Analysts have responded to these results with varied ratings and price targets. UBS maintained a Buy rating with a price target of $1,205, citing Costco’s resilience and growth potential. BMO Capital Markets reiterated an Outperform rating and set a price target of $1,175, highlighting Costco’s effective supply chain and strong membership base. Truist Securities raised its price target to $1,042 while keeping a Hold rating, acknowledging Costco’s consistent sales growth and improved EBIT margins. Barclays (LON:BARC) increased its price target to $1,000, maintaining an Equalweight rating, and noted Costco’s market share gains and improved profit margins. DA Davidson reaffirmed a Neutral rating with a $1,000 price target, pointing to Costco’s strong gross margin despite rising expenses. These recent developments reflect analysts’ confidence in Costco’s operational strategies and its ability to navigate economic challenges, although some express caution regarding the stock’s valuation.
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