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JPMorgan likes Costco's risk/reward into the print

Published 05/12/2023, 18:16
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JPMorgan analysts raised its price target for Costco (NASDAQ:COST) to $652 from $605 per share in a note Tuesday, maintaining an Overweight rating on the stock.

The firm said that for Costco, which reports earnings on Thursday, December 7, the release, alongside how CFO Richard Galanti speaks to potential future price investment, are usually catalysts for the stock.

"We expect the obligatory questions on when a special dividend comes (we remain hopeful that one comes prior to the end of the calendar year) and when it will raise the membership fee (which we think is off the table for a while given the macro backdrop)," said analysts.

"On earnings, despite the last two months sales coming in lighter than expected, we are ahead of the Street and like the risk-reward into the print on gross margin upside from lower than expected gas margin headwinds YOY (as experienced by both BJ and Sam's) and perhaps some LIFO tailwinds," they added.

The investment bank's updated EPS estimate is $3.64 vs. $3.41 per Consensus Metrix, while its FY24 EPS forecast is $15.31 vs. the Street's $15.68.

Costco shares are trading over 1% higher at the time of writing on Tuesday.

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