Analysts count on continued top-line acceleration for Costco (NASDAQ:COST)

Costco Wholesale Company’s (NASDAQ:COST) robust September gross sales figures mirror the worth proposition that ought to promote additional market share beneficial properties, in keeping with analysts.

On Wednesday, the Washington-based retailer posted an 8.6% acquire in comparable gross sales, exceeding expectations. Site visitors to shops additionally confirmed a robust uptick, with analysts pointing to elevated fuel costs as a key motivating issue including to normal discount searching amongst more and more value-oriented shoppers.

“Greater image, COST’s membership traits have by no means been stronger, and the corporate’s entrenched worth positioning and defensive/staples-heavy gross sales combine present enticing P&L

resiliency amid at present’s harder spending backdrop,” Baird analyst Peter Benedict commented. “With a defensive/staples-heavy gross sales combine and dependable member base, we imagine shares proceed to carry basic enchantment as a uncommon mega-cap ‘progress staple’.”

Truist Securities analyst Scot Cicarelli homed in on the identical traits, anticipating market share beneficial properties to proceed as persistent inflation highlights Costco’s (COST) worth proposition. Each analysts assigned an “Outperform” ranking to the inventory.

To make certain, the corporate’s reticence to lift costs to match its robust top-line progress was highlighted as a priority by extra cautious analysts. Certainly, DA Davidson analyst Michael Baker expressed issues on margins on the retailer because it refuses to lift, or lower, costs. Additional, he expects visitors traits to drag again if fuel costs retreat in coming quarters.

“We imagine rising fuel costs helped COST take share on the pump and drove incremental visitors. Administration famous that they’ve been in a position to compete with different discounters as costs have fallen on their earnings name two weeks in the past,” Baker defined. “We have a tendency to fret about COST’s margins, as a result of the fuel enterprise has decrease margins, and their potential to proceed to drive visitors falls as fuel costs fall.”

Each Baker and Guggenheim’s John Heinbockel assigned “Impartial” scores to the inventory on the again of those issues and an elevated valuation. Citi analyst Paul Lejuez added that competitors provides to issues, motivating his personal “Impartial” ranking.

Nonetheless, catalysts obtainable for the retailer in coming months imply backside line issues could possibly be assuaged within the close to future. Oppenheimer analyst Rupesh Parikh suggested purchasers that volatility in shares needs to be seized upon.

“A membership charge improve and a particular dividend might characterize optimistic catalysts in coming quarters,” he wrote on Thursday. “COST shares stay a high choose for us. We might benefit from a possible continued risky commerce from right here.”

Rounding out reactions, Jefferies additionally known as the inventory a “high choose” within the current market atmosphere and assigned one of many Avenue’s larger value targets at $610.

Shares of Costco (COST) rose 0.45% on Thursday.

Dig into Wall Avenue scores on Costco.