Oppenheimer has increased its price target on shares of Costco Wholesale (NASDAQ: NASDAQ:COST) to $980 from $955, while maintaining an Outperform rating on the stock.
The decision follows the retailer's report of a significant rise in September's adjusted U.S. comparable sales, which saw an increase of 9.3% excluding gas sales. The uptick in sales was partly attributed to unusual consumer behavior spurred by recent port strikes and the impact of Hurricane Helene.
Costco's performance was bolstered by a couple of factors, including an approximate 2 percentage point boost from the aforementioned abnormal events. The company's non-foods category, especially jewelry (gold bars) and gift cards, continued to shine, registering a low-teens increase. This aligns with optimistic observations from Oppenheimer's store checks, previously noted last week, particularly for Costco and the broader club channel.
The analyst from Oppenheimer anticipates that Costco's robust top-line growth will continue for the remainder of the year, driven by the retailer's exceptional merchandising strategies and its compelling value proposition. Additionally, a potential near-term increase in membership is expected, as Costco has intensified its efforts in checking membership cards at its stores.
In other recent news, Costco Wholesale has reported a 9% increase in net income to $2.354 billion and a 1% rise in net sales to $78.2 billion in its Fourth Quarter 2024 Earnings Call. The company's e-commerce sales also saw a significant 18.9% increase. Costco's net sales for September rose by 9%, reaching $24.62 billion.
Several analyst firms have updated their assessments of the company. Evercore ISI has raised Costco's stock price target to $990, while DA Davidson and Citi have maintained Neutral stances with consistent price targets of $880 and $800, respectively.
Despite potential disruptions from the ongoing dockworker strike at East Coast and Gulf Coast ports, Costco has reported robust sales performance and proactive measures to navigate these challenges.
InvestingPro Insights
Costco's strong performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $402.8 billion, reflecting its dominant position in the retail sector. Costco's revenue for the last twelve months reached $254.45 billion, with a growth rate of 5.02%, aligning with the analyst's expectations of continued robust top-line growth.
InvestingPro Tips reveal that Costco is a prominent player in the Consumer Staples Distribution & Retail industry, which is consistent with its strong market presence discussed in the article. The company's high return over the last year, with a one-year price total return of 66.46%, underscores its exceptional performance and aligns with the positive outlook presented by Oppenheimer.
Another relevant InvestingPro Tip indicates that Costco has maintained dividend payments for 21 consecutive years, demonstrating its financial stability and commitment to shareholder returns. This could be an additional factor contributing to investor confidence in the company.
For readers interested in a more comprehensive analysis, InvestingPro offers 17 additional tips for Costco, providing a deeper understanding of the company's financial health and market position.
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