Baird reiterated an outperform rating on Costco Wholesale (NASDAQ: NASDAQ: ), while maintaining a price target of $975.00. Costco’s underlying global comparable sales, excluding gas and foreign exchange impacts, rose 8.9%, the company’s analysis highlighted.
This increase includes an approximately 1.5% increase in storage activity that occurred in late September, due to expected severe storms and port strikes.
The report noted an acceleration in customer traffic and average ticket size compared to August, as inventory purchases contributed to this trend. Consecutive improvements were observed across core categories, particularly in non-food items, and e-commerce sales remained strong. Regionally, strong results in the United States and Canada were enough to offset slight moderation in other international markets.
Costco’s performance was described as another strong month, with a “normal” underlying growth rate of about 7.4%, exceeding the 7.1% growth seen in August. The company’s continued consumer appeal was emphasized, especially in a retail environment that remains challenging for spending.
In other recent news, Costco Wholesale has made big strides despite potential disruptions due to an ongoing strike by dock workers at its East Coast and Gulf Coast ports. The company reported a 9% increase in net income to $2.354 billion and a 1% increase in net sales to $78.2 billion in its Q4 2024 earnings call. E-commerce sales saw a staggering 18.9% increase, while September net sales rose By 9%, reaching $24.62 billion.
Analysts Evercore ISI, DA Davidson and Citi updated their ratings for Costco. Evercore ISI raised its price target on Costco stock to $990, citing strong sales performance, while DA Davidson maintained a neutral stance with a firm price target of $880. Citi also reiterated its Neutral rating with a price target of $800.
In response to the ongoing dockworkers’ strike, Costco has taken proactive measures such as pre-shipping holiday merchandise and is prepared to switch to alternative ports if necessary. Analysts from TD Cowen, Evercore ISI and BofA Securities showed confidence in Costco’s ability to overcome these challenges, revising their price targets upward.
InvestingPro Insights
Costco’s strong performance, as highlighted in the article, is also supported by InvestingPro’s data and advice. The company has a market capitalization of US$402.8 billion, reflecting its strong position in the consumer goods distribution and retail sector. Costco’s revenue over the past 12 months reached $254.45 billion, a growth rate of 5.02%, which is in line with the article’s focus on the company’s continued consumer appeal.
InvestingPro’s advice notes that Costco has maintained its dividend for 21 consecutive years, underscoring its financial stability and commitment to shareholder returns. This consistency is especially noteworthy given the challenging retail environment mentioned in the article.
Another related InvestingPro tip indicates that Costco is trading near its 52-week high, supporting Baird’s Outperform rating and $975 price target. The company’s strong position in the market is also evidenced by its high returns over the past year, with the total return on one-year price reaching 66.46%.
For investors looking for a deeper understanding of Costco’s financial health and market position, InvestingPro offers 15 additional tips, providing comprehensive analysis to guide investment decisions.
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