For quite some time now, people have been watching the food court at bulk retailer Costco (COST), fearing that, for the first time in decades, it might hike the prices on its hot dog and soda combination. Costco recently changed just that, but not the price. The move was not exactly welcome with shareholders, however, who sent shares down fractionally in Tuesday afternoon’s trading.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
The big shakeup was not related to prices, but rather to the kind of soda one gets at the food court. Where for years, Costco’s food court was a Pepsi (PEP) fan, it recently made the switch to Coca-Cola (KO) instead. The shift will take place this summer, reports note, and actually represents a second reversal. Costco food courts were previously Coke outlets, but shifted to Pepsi in a bid to maintain the prices for which it had been known, and often celebrated.
A second report, however, noted that Coke was a little more willing to hold the line on pricing at Costco, and thus, Costco was able to switch back to Coke from Pepsi. It is unclear, however, if Pepsi was willing to shift its own pricing in a bid to meet Costco’s needs.
But The Shareholders Want DEI
Costco is also still embroiled in a battle over Diversity, Equity and Inclusion (DEI) at its stores, with the government taking a hand. While state attorneys general are weighing in, and calling for Costco to cut out the DEI, shareholders are weighing in in favor.
In fact, one report noted that over 98% of shareholders voting at a recent meeting turned down a proposal that would call for Costco to “…evaluate any risks posed by its diversity, equity and inclusion practices.” This was actually in keeping with Costco’s board’s own recommendation, as the board voted unanimously to urge shareholders to turn down the proposal as well.
What Is the Prediction for Costco Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on COST stock based on 16 Buys and eight Holds assigned in the past three months, as indicated by the graphic below. After a 39.23% rally in its share price over the past year, the average COST price target of $1,059 per share implies 10.1% upside potential.
