Summary:
• Costco (NASDAQ:COST) sank 1% on Thursday, after an analyst downgraded the stock.
• Based on its market cycles, we believe the stock has more downside risk in the coming months.
Costco (COST) Stock Weekly Chart from askslim.com
Investment management firm Bernstein’s Brandon Fletcher downgraded COST from underperform from market perform. He also raised his price target to $230 from $220, which is over $50 lower than the current price.
Fletcher explained that, “We think valuation is too high and investors are likely overestimating the continuation of its trend and/or pace of reinvigorated growth.” He also noted that annual fees like Costco’s may be the first expense that consumers cut in an economic downturn.
Our approach to stock analysis uses market cycles to project price action. Our analysis is that the stock may now be in the declining phase of its current cycle. In fact, it may have made the top for this cycle. Our target is for a drop below $270 by November.
For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel.