Costco’s stock experienced a surge on Wednesday, reaching new record levels as it anticipates its earnings report later on Thursday. The retail giant, Costco Wholesale (COST), has demonstrated double-digit earnings growth in the past three quarters, coupled with revenue growth ranging from low to upper single digits during that period.
For the upcoming Q1 results, FactSet projects an 11% growth in earnings to $3.41 per share, supported by a 6.2% increase in sales to $57.79 billion.
Price Target Lifted for Costco Stock
Analysts have raised their price targets for COST stock ahead of the earnings announcement, citing recent strong performance and expectations of a potential membership fee hike. Evercore ISI analyst Greg Melich noted that Costco has been a “juggernaut” in the past month, setting a high bar for the upcoming quarterly report. Evercore ISI increased its price target on Costco stock by $10 to $650, maintaining an outperform rating on shares and anticipating further positive momentum into 2024, especially with the prospect of a membership price increase.
Costco’s CFO, Richard Galanti, acknowledged the possibility of a membership fee hike, stating in the Q3 earnings call, “Increasing the price of Costco memberships is a question of when, not if.” The last membership fee increase occurred in June 2017, and while the company hasn’t confirmed plans for a new increase, it remains a potential consideration.
Telsey Advisory, on Nov. 30, commended Costco for executing well in an uncertain operating environment and reported solid November performance, outpacing many other retailers. Telsey anticipates further market share gains for Costco, driven by robust sales and high membership renewal rates. The firm raised its price target on COST stock to $625 from $600, maintaining an outperform rating.
Costco stock rose by 2% on Wednesday in anticipation of the earnings report. Following a breakout from a flat base on Sept. 28, shares surged approximately 12%. On Dec. 8, the stock surpassed its prior all-time high of $612.27 from April 7, 2022.
Costco stock has experienced an impressive spike of around 40% year-to-date, reflecting the company’s robust financial performance and positive market sentiment.
