According to Wells Fargo, Costco's (NASDAQ:COST) March sales were "pure gold," and the company's underlying momentum was strong.
Costco reported total company comp growth of 7.5% that beat the consensus of 6.3%. Its results included a 0.5% Easter shift benefit. Total company traffic accelerated sequentially to 7.2%, while the average ticket increased 0.5%.
"COST's non-foods category posted impressive LDD growth, up from an MSD Feb. gain. eComm grew a robust 28.0% (ex-fuel/FX), the biggest increase since March '21," said Wells Fargo.
Analysts added: "We believe COST was helped considerably by its recent expansion into very low profit precious metals (est. at $200-300m in March), which we estimate accounted for over 2/3 of eComm growth, 400-500bps to gen merch growth, and 150bps+ of the US comp gain."
Wells Fargo believes Costco's run as one of the highest-quality consumer companies will continue, as evidenced by its strong results. They expect it to continue to take share as it leans on its value offering and has an eventual catalyst in MFI.
However, at its current valuation, they view the risk/reward as balanced and maintain an Equal Weight rating on the stock.