On Thursday, Baird maintained its Outperform rating on shares of Costco Wholesale (NASDAQ:COST) and increased the price target to $1,075 from the previous $975. The firm's analyst highlighted the company's continued healthy performance, noting that Costco's "normalized" core growth stood firm at approximately 6.4%, despite a roughly 150 basis points headwind from the shift of Cyber Week.
The analyst observed that the two-year stacked growth remained stable with that of October. The stock has demonstrated remarkable strength, surging 51% year-to-date and trading near its 52-week high of $991.15. According to InvestingPro analysis, the stock appears overvalued at current levels, with multiple ProTips indicating elevated valuation metrics.
Costco's recent negative calendar shift particularly affected e-commerce and non-food categories, yet the retailer still posted solid growth across core categories and regions, with all showing mid-single-digit percentage increases or better.
With a market capitalization of $439 billion and revenue growth of 5.02% over the last twelve months, this performance comes ahead of the company's anticipated financial results on December 12. InvestingPro subscribers can access 14 additional exclusive insights and detailed valuation metrics to prepare for the upcoming earnings release.
The firm's analyst pointed out that Costco's first quarter sales slightly surpassed their model, and they anticipate that gas profits and margins were likely strong during this period. Based on these factors, the analyst has revised their earnings per share (EPS) estimate upward.
Baird's updated stance reflects confidence in Costco's ability to continue its growth trajectory, encouraging investors to seize the opportunity to buy shares at the new price target of $1,075. The analyst's comments suggest a positive outlook for the company's upcoming financial report, indicating that the fundamentals of Costco remain robust.
In other recent news, Walmart (NYSE:WMT) Inc. has been added to Bank of America (NYSE:BAC)'s US 1 List, indicating a positive outlook on the company's growth prospects. This strategic move recognizes Walmart's market share gains, digital advertising expansion, and other high-margin business growth. Concurrently, Costco Wholesale Corporation (NASDAQ:COST) was removed from the list due to concerns over potential constraints on earnings growth, despite maintaining a strong Buy rating.
Similarly, Costco has been the subject of several analyst reviews. Telsey Advisory Group reaffirmed an Outperform rating, anticipating strong total comparable sales growth. Tigress Financial Partners and Oppenheimer also maintained positive stances, raising their price targets based on the retailer's sustained sales momentum and expansion.
Costco has reported a 1% year-over-year increase in Q4 2024 revenue, reaching $79.7 billion, and a 9% rise in net income to $2.354 billion. E-commerce sales saw a significant increase of 18.9%. The company has also updated its executive bonus plan to include environmental and social performance criteria, aligning executive incentives with broader corporate responsibility goals.
These recent developments highlight the ongoing strategic initiatives and robust financial performance of both Walmart and Costco. As these retail giants navigate market conditions and continue their growth trajectories, investors can expect to see continued adjustments and innovations in their business strategies.
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