Wholesale retailer Costco (COST) is preparing to release its fiscal 2026 third-quarter earnings on Thursday, May 28. Ahead of the results, analysts have started to state their support for the Issaquah, Washington-based company.
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What Wall Street Expects from Costco’s Q3
During the three-month period that ended on May 10, analysts anticipate that Costco’s total revenue grew by 10% year-over-year to $69.61 billion. They also see the retailer’s diluted earnings per share rising by roughly 6% from a year ago to hit $4.98.
Costco has topped EPS estimates over the past four quarters, as the image below shows.
Why UBS Remains Bullish on Costco
In assessing Costco ahead of the earnings, UBS analyst Michael Lasser reaffirmed his Buy rating and raised his price target by roughly 6% from $1,205 to $1,275. This implies approximately 18% upside.
The five-star analyst believes that the results should help to strengthen the case of analysts backing the retailer’s shares despite debates on COST stock. According to Lasser, current contention on Costco centers on:
- Whether the retailer can sustain the current level of its comparable sales, that is, sales from stores opened for at least a year
- Whether Costco’s membership renewal rate would further worsen
- The lack of growth in the number of members of its warehouses
- Whether Costco can keep growing the profitability of its core operations
- Whether higher gas prices will impact its earnings
Despite the debate, the UBS analyst remains convinced of Costco’s ability to weather higher fuel prices due to the nature of its customers, the sales benefits from customers seeking cheaper fuels at its stations, and its hyper focus on securing the lowest prices for customers.
Oppenheimer Bullish despite Margin Fears
Similarly, Oppenheimer analyst Rupesh Parikh maintained his Buy rating on Costco and lifted his price target from $1,100 to $1,160, suggesting about 6% upside. Parikh sees temporary pressure on Costco’s EPS from its low-margin fuel business but remains confident in the company’s business model’s ability to deliver larger-than-normal share price appreciation.
Is Costco a Good Stock Buy Now?
Across Wall Street, Costco’s shares remain a Moderate Buy based on analysts’ consensus rating. This breaks down into 16 Buys, six Holds, and one Sell issued by 23 analysts over the past three months.
However, the average COST price target of $1,112.35 only implies about 3% upside.
