Analyst Zhihan Ma from Bernstein maintained a Buy rating on Costco and keeping the price target at $1,153.00.
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Zhihan Ma’s rating is based on several compelling factors that highlight Costco’s strong market position and growth potential. Despite its high valuation, trading at approximately 49 times forward earnings, the company’s robust earnings growth justifies this premium. The expansion of Costco’s store network is a significant driver of membership growth, while the enduring appeal of its value proposition ensures high retention and traffic among members.
Kirkland Signature, Costco’s private label brand, plays a crucial role in this value proposition. By offering quality products at a 20% discount compared to popular name brands, Kirkland Signature has become a key factor in customer satisfaction and loyalty. The brand’s widespread recognition and frequent purchase by consumers further underscore its success. Looking ahead, international markets are expected to fuel further store and membership growth, with Kirkland Signature continuing to be instrumental in maintaining Costco’s high customer loyalty.
In another report released on July 17, Oppenheimer also maintained a Buy rating on the stock with a $1,130.00 price target.