Wholesale retailer Costco’s (COST) 11.3% year-over-year growth in March net sales and 9.4% increase in comparable sales growth have drawn praise from bullish analysts and a more cautious response from those on the sidelines. Mizuho nonetheless described the increase as “exceptionally strong.”
During the five-week period that ended on April 5, Costco grew its net sales to $28.41 billion.
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Telsey Flags Growth in Challenging Environment
Responding to the results, Telsey Advisory analyst Joe Feldman lifted his price target from $1,125 to $1,135, predicting about 10% upside. Feldman also maintained his Outperform (Buy) rating on COST, noting that Costco continues to deliver strong performance despite the current challenging operating environment.
He added that the retailer is likely to keep profitably taking market share from competitors.
Similarly, Deutsche Bank’s Krisztina Katai described the sales figures as solid and reaffirmed her Buy rating on COST. Katai raised her price target on Costco’s shares from $1,103 to $1,104, implying roughly 7% upside.
Wells Fargo Warns about Consumer Spending
By contrast, Wells Fargo analyst Edward Kelly rated COST as Equal Weight (Neutral/Hold) despite raising his price target by 5% to $1,000, up from $950, representing about 3% downside risk. Kelly also hailed the wholesale retailer’s performance as strong but decided to stay on the sidelines as he expects minimal boost for Costco’s shares from the numbers.
The five-star analyst also pointed to continued cautious spending by consumers over economic uncertainty.
Joining the neutral side, Truist Financial’s five-star analyst Scot Ciccarelli also placed a Hold rating on COST despite contending that the retailer’s business “remains strong.” Ciccarelli noted that Costco’s shares are already valued at nearly 48 times what the Issaquah, Washington-based company earns per share each year.
Is Costco Still a Good Stock to Buy?
Across Wall Street, analysts’ consensus rating on Costco’s shares remains a Moderate Buy. This is based on 17 Buys, six Holds, and one Sell assigned over the past three months.
However, the average COST price target of $1,102.42 only implies about 7% upside.
