Truist raises Costco stock price target to $1,042, keeps Hold rating

On Friday, Truist Securities updated its outlook on Costco Wholesale (NASDAQ:COST), increasing the price target to $1,042 from the previous target of $995, while maintaining a Hold rating on the stock. Scot Ciccarelli, an analyst at Truist, provided insights into the company’s recent performance, noting that Costco has delivered another quarter of strong results, showcasing the most consistent comparable sales growth within their coverage area. The company’s strong performance is reflected in its impressive $268.78 billion revenue over the last twelve months, with 9 analysts recently revising their earnings expectations upward according to InvestingPro data.

Costco reported a U.S. and Enterprise comparable sales increase of approximately 8.0%. Ciccarelli highlighted that the company’s success could be attributed to its effective merchandising strategies and the unique ’treasure hunt’ shopping experience it offers. Additionally, the value proposition for Costco members is seen as a significant draw. This strategy has helped maintain strong financial health, earning a "GOOD" overall rating from InvestingPro, which notes the company’s 22-year track record of consistent dividend payments and robust cash flow coverage of interest payments.

The analyst also pointed out improvements in EBIT margins, suggesting that Costco’s pricing strategy not only delivers value to its members but also incrementally enhances profitability. Despite acknowledging the robust fundamentals demonstrated by the company, Ciccarelli expressed caution regarding Costco’s valuation. With the stock trading at around 53 times the calendar year 2025 earnings per share (CY25EPS), he suggested that it might be challenging for investors to commit new capital to Costco shares at the current valuation. InvestingPro analysis indicates the stock is currently overvalued, with multiple metrics including P/E ratio of 58.79x and EV/EBITDA of 35.44x supporting this view.

Costco’s consistent performance and margin improvements reflect a positive trend, yet Truist Securities’ stance remains cautious based on the stock’s valuation metrics. The new price target of $1,042 indicates a slight optimism about the company’s future performance, but the Hold rating implies that Truist advises investors to maintain their current positions without increasing their stake in the company. For deeper insights into Costco’s valuation and growth prospects, investors can access comprehensive analysis and over 30 additional key metrics through InvestingPro’s detailed research reports.

In other recent news, Costco Wholesale Corporation reported its third-quarter fiscal year 2025 earnings, revealing a net income of $1.9 billion, marking a 13% increase year-over-year. The company’s earnings per share (EPS) of $4.28 slightly exceeded analysts’ forecasts, although revenue fell short at $61.96 billion against the expected $63.11 billion. Barclays (LON:BARC) raised Costco’s stock price target to $1,000, maintaining an Equalweight rating, citing impressive growth and market share gains. Meanwhile, Loop Capital slightly reduced its price target to $1,110 but reaffirmed a Buy rating, highlighting Costco’s strong same-store sales performance and increased membership fee income. Raymond (NSE:RYMD) James maintained an Outperform rating with a $1,070 price target, praising Costco’s robust membership trends and comparable store sales growth. Bernstein also raised its price target to $1,153, maintaining an Outperform rating, and noted Costco’s strong financial performance and potential for global expansion. Despite these positive developments, some analysts expressed caution regarding potential risks such as inflation and tariff impacts that could affect Costco’s future performance.

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