On Thursday, Stifel analysts reiterated their Buy rating and $1,000.00 price target on shares of Costco Wholesale (NASDAQ:COST), a $411.7 billion market cap retail giant with a "GOOD" financial health rating according to InvestingPro, following the company's strong December sales performance. Costco reported a 9.9% increase in total comparable sales and a 9.8% rise in U.S. core comparable sales for the month of December.
These figures notably surpassed the consensus expectations of 5.4% and 5.2%, respectively, even after adjusting for the timing shift of Thanksgiving, Black Friday, and Cyber Monday, which contributed an additional 1.5% to the sales figures.
The company's two-year growth trajectory indicates an acceleration of approximately 200 basis points when accounting for the holiday timing shift, marking the highest level of growth since late 2023. This growth builds upon Costco's impressive $258.8 billion in revenue over the last twelve months, with a sustainable 5.4% year-over-year increase. The growth was led by Non-Foods categories, which saw high-teens increases, likely benefiting from the holiday shift and indicative of robust share gains in discretionary categories. Additionally, Food & Sundries and Fresh Foods categories continued their consistent performance with mid-single and high-single digit increases, respectively.
Ecommerce sales also saw a significant uptick, with an approximate 21% increase after adjusting for the holiday shift. This represents an acceleration from recent trends on a two-year basis. The sustained strong performance across various segments has contributed to Stifel's continued confidence in the company.
In their analysis, Stifel highlighted Costco's best-in-class performance as a justification for the retailer's premium multiple. The firm's price target is based on 31 times the forecasted 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA). The analysts' stance reflects a positive outlook on Costco's ability to maintain its growth trajectory and market leadership. While currently trading above InvestingPro's Fair Value estimate, the stock maintains a strong track record with 21 consecutive years of dividend payments and relatively low price volatility.
In other recent news, Costco Wholesale Corporation (NASDAQ:COST) has reported a significant increase in its December sales and first eighteen weeks of the fiscal year. The company experienced a 9.9% rise in December sales, reaching $27.52 billion, and an 8.0% increase in net sales for the first eighteen weeks of its fiscal year.
Analysts from Raymond (NS:RYMD) James and TD Cowen have responded by raising their stock price targets for Costco, highlighting the company's robust consumer appeal, particularly in the United States. Baird has also reaffirmed its Outperform rating on Costco, maintaining a price target of $1,075 per share, following the company's earnings that slightly exceeded expectations. Costco's core comparable sales in the U.S. rose by 7%, demonstrating the company's potential for continued revenue growth.
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