UBS reiterates Buy rating on Costco stock with $1,205 price target

Investing.com - UBS maintained its Buy rating on Costco Wholesale (NASDAQ:COST) with a price target of $1,205.00, citing the retailer’s strong performance despite apparent sales slowdown in September. With 11 analysts recently revising earnings upwards and the stock currently trading at $941.17, InvestingPro data shows the company maintains a GOOD overall financial health score.

The investment firm noted that Costco’s September sales figures faced a challenging year-over-year comparison, as last year’s numbers were boosted by increased consumer spending related to Hurricane Helene and anticipated port strikes. Despite these challenges, the company has maintained strong revenue growth of 8.17% over the last twelve months.

UBS observed that Costco’s multi-year sales stacks actually showed slight acceleration from August to September, with the company offsetting slower one-year traffic growth through modest ticket size increases, reflecting healthy overall consumer spending rather than tariff-related price hikes.

The retailer continued to benefit from extended store hours, which UBS estimates added approximately 100 basis points to comparable sales in the United States, while e-commerce sales accelerated, driven particularly by jewelry and precious metals categories.

Despite a softer overall consumer spending environment in September, Costco generated a 6% core comparable sales growth, which UBS characterized as "another strong showing" by the wholesale retailer.

In other recent news, Costco Wholesale reported net sales of $26.58 billion for September, marking an 8.0% increase from the same period last year. The company’s total comparable sales grew by 5.7%, surpassing analyst expectations of 4.6%. U.S. comparable sales saw a growth of 5.1%, while sales in Canada and other international markets rose by 6.3% and 8.5%, respectively. Despite this positive performance, DA Davidson maintained a Neutral rating on Costco, citing a slowdown in total comparable sales growth to 5.7% in September from 6.3% in August. Similarly, Mizuho also kept a Neutral rating but lowered its price target from $975 to $950, pointing to the deceleration in U.S. comparable sales growth. These developments come as Costco’s September sales exceeded estimates, driven by increased foot traffic and higher spending per customer. The company’s strong sales performance has been a focal point for analysts and investors alike.

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