On Thursday, Stifel, a renowned financial services firm, increased its stock price target for Costco Wholesale (NASDAQ:COST) shares, lifting it to $1,000 from the previous $935. The firm has maintained a Buy rating on the stock. Trading near its 52-week high of $991.15 and commanding a market capitalization of $439 billion, Costco has delivered an impressive 51% return year-to-date.
According to InvestingPro analysis, the stock appears to be trading above its Fair Value. This adjustment reflects Costco's reported total and U.S. core comparable sales growth for November, which stood at 4.9% and 4.3%, respectively.
The timing of Thanksgiving, Black Friday, and Cyber Monday, occurring a week later than usual in 2024, was noted to have a negative impact on sales by 1.5%. However, when adjusting for this shift, the comparable sales figures suggest an outperformance against the consensus estimates of 5.5% and 5.4%.
With an overall financial health score rated as "GREAT" by InvestingPro, which offers 16 additional valuable insights about Costco's performance, the company maintains strong fundamentals despite market fluctuations.
Examining the results on a two-year basis and after normalizing for the holiday shift, the performance remained consistent with the mid-single-digit growth observed in recent quarters and months. Notably, non-foods comparable sales saw a mid-single-digit increase, which indicates that Costco continues to gain market share in various discretionary categories despite the potential setback from the holiday shift.
The food and sundries and fresh foods categories both reported growth in the mid to high single digits, aligning with the trends seen in recent periods. Moreover, e-commerce sales experienced a 12.5% increase after adjusting for the holiday shift, which aligns with the strong growth trajectory that has been evident since June when viewed on a two-year basis.
In anticipation of Costco's first-quarter results for fiscal year 2025, due on December 12, Stifel has updated its estimates. The new price target of $1,000 is based on 31 times the projected earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal year 2026. With current revenue of $254.45 billion and a steady dividend yield of 0.47%, Costco continues to demonstrate solid financial performance.
The firm's stance suggests an opportunistic approach to investing in Costco, advising to capitalize on any price weaknesses, especially given the company's recent strong performance. Discover comprehensive valuation metrics and detailed analysis in Costco's Pro Research Report, available exclusively on InvestingPro.
In other recent news, Costco Wholesale has been the subject of considerable attention from analyst firms. Baird, maintaining an Outperform rating, raised the price target to $1,075, citing Costco's solid growth across core categories and regions.
Telsey Advisory Group also reaffirmed an Outperform rating on Costco, projecting a strong total comparable sales growth of 5.0% for November 2024. Tigress Financial Partners maintained a Buy rating and increased the stock's price target to $1,065, highlighting the retailer's sustained in-store traffic and e-commerce momentum.
In contrast, Bank of America (NYSE:BAC) removed Costco from its US 1 List due to concerns over potential constraints on earnings growth, despite maintaining a strong Buy rating. 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.
In other recent developments, Costco updated its executive bonus plan to include environmental and social performance criteria, aligning executive incentives with broader corporate responsibility goals. These are recent developments within Costco that provide insights for investors.
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