DJ Costco Had a Great Quarter. Here's What Wall Street Is Saying. -- Barrons.com

By Teresa Rivas

Costco Wholesale stock fell early Friday, even though the discounter reported another strong quarter. That hasn't stopped analysts from singing the stock's praises.

Costco (ticker: COST) easily sailed past consensus estimates in its fiscal fourth-quarter, reported Thursday, although high expectations and share valuation are weighing on the stock today.

Still, analysts were quick to applaud the retailer's results, and several raised their price targets. BMO Capital Markets' Kelly Bania reiterated an Outperform rating and raised his target to $385 from $340, writing that she expects "continued momentum for its unique business model, supported by incredible consistency in renewal rates, continued rising executive penetration, and long-term benefits from the current environment."

Morgan Stanley's Simeon Gutman reiterated an Overweight rating and raised his target to $360 from $330, writing that this is a rare "buy the dip," as Costco will be able to "steadily grind higher regardless of macro/virus outcomes."

Raymond James's Bobby Griffin reiterated an Outperform rating and raised his target to $365 from $355. He notes the shares might not look cheap, but they are on the cusp of a multiyear e-commerce and international expansion, and "the value and services Costco offers its members creates a very resilient business model and a compound earnings growth story, justifying the higher valuation."

RBC Capital Markets' Scot Ciccarelli reiterated an Oupterform rating and raised his target to $412 from $400. "We remain bullish on Costco given its ultralow markup process, massive buying scale, growing e-commerce business and 'value' positioning in what will likely be a more difficult economic environment."

Stifel's Mark Astrachan reiterated a Buy rating and raised his target to $380 from $375. He says the stock's "premium multiple [is] justified by strong comp growth, share gains, and a durable and cash-generative business model."

Telsey Advisory Group's Joseph Feldman reiterated an Outperform rating and raised his target to $390 from $385. "Broadly, we expect Costco to be one of the winners in the 2020 holiday season."

Costco is off 3.1% to $336.40 in recent trading, although the shares are still up more than 16% in 2020. The company has been putting up consistently strong monthly sales throughout the summer, as it's one of a cohort of big essential retailers that has seen the most benefit from the Covid-19 crisis.

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Write to Teresa Rivas at teresa.rivas@barrons.com

(END) Dow Jones Newswires

September 25, 2020 11:25 ET (15:25 GMT)

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