Baird has reiterated its Outperform rating on Costco Wholesale (NASDAQ: NASDAQ:COST), maintaining a $975.00 price target. The firm's analysis highlighted that Costco's global core comparable sales, excluding gas and foreign exchange impacts, rose by 8.9%.
This increase includes a roughly 1.5% boost from stock-up activities that occurred in late September, due to anticipated severe storms and port strikes.
The report observed an acceleration in both customer traffic and average ticket size compared to August, with stock-up purchases contributing to this trend. Sequential improvements were noted across core categories, particularly in non-food items, and ecommerce sales remained strong. Regionally, robust results in the U.S. and Canada were enough to balance out a slight moderation in other international markets.
Costco's performance was described as another robust month, with a "normalized" core growth rate of approximately 7.4%, which outpaced the 7.1% growth seen in August. The company's sustained consumer traction was emphasized, especially in a retail environment that continues to be challenging for spending.
In other recent news, Costco Wholesale has been making significant strides despite potential disruptions due to the ongoing dockworker strike at East Coast and Gulf Coast ports. The company reported a 9% increase in net income to $2.354 billion and a 1% rise in net sales to $78.2 billion in its Fourth Quarter 2024 Earnings Call. E-commerce sales saw an impressive 18.9% increase, while September's net sales rose by 9% to reach $24.62 billion.
Analyst firms Evercore ISI, DA Davidson, and Citi have updated their assessments of Costco. Evercore ISI raised Costco's stock price target to $990, citing robust sales performance, while DA Davidson maintained a Neutral stance with a consistent price target of $880. Citi also reiterated its Neutral rating with a price target of $800.
In response to the ongoing dockworker strike, Costco has taken proactive measures such as pre-shipping holiday merchandise and is prepared to switch to alternative ports if necessary. Analysts from TD Cowen, Evercore ISI, and BofA Securities have shown confidence in Costco's ability to navigate these challenges, revising their price targets upward.
InvestingPro Insights
Costco's robust performance, as highlighted in the article, is further supported by InvestingPro data and tips. The company's market capitalization stands at an impressive $402.8 billion, reflecting its strong position in the Consumer Staples Distribution & Retail industry. Costco's revenue for the last twelve months reached $254.45 billion, with a growth rate of 5.02%, aligning with the article's emphasis on the company's sustained consumer traction.
An InvestingPro Tip notes that Costco has maintained dividend payments for 21 consecutive years, underscoring its financial stability and commitment to shareholder returns. This consistency is particularly noteworthy given the challenging retail environment mentioned in the article.
Another relevant InvestingPro Tip indicates that Costco is trading near its 52-week high, which corroborates Baird's Outperform rating and $975 price target. The company's strong market position is further evidenced by its high return over the last year, with a 1-year price total return of 66.46%.
For investors seeking a deeper understanding of Costco's financial health and market position, InvestingPro offers 15 additional tips, providing a comprehensive analysis to inform investment decisions.
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