The new target represents 10% potential upside from the stock’s Friday closing price of $304.68. The shares at last check were 2.6% higher at $312.70.
“We see the potential for a catch-up trade as investors could eventually rotate into laggards and as a very onerous second-quarter earnings-per-share comparison soon passes,” Oppenheimer analyst Rupesh Parikh said.
The stock has recovered from a slump late last year. It has recovered by more than 7% since Jan. 2.
That swoon dropped the Issaquah, Wash., retailer’s relative price-to-earnings multiple to 1.8 times from a peak level of 2.07 times in late August. That reduced valuation led Oppenheimer analysts to lift the company’s price target and reiterate its bullish stance.
A tailwind for the stock could be a special dividend of around $10 a share that could be declared in the coming quarter.
That estimate is based on the company having about $22 a share in cash after paying down $1.7 billion in debt this year.
Other tailwinds that Costco could see in the near term are a steady labor market, steady wage gains and improved consumer sentiment, according to a separate analysis by Zacks Research.
It is not all smooth sailing from here for the company, however, as Parikh says the company will be up against tough second-quarter comparisons.
Costco is set to report fiscal-second-quarter earnings on March 5 after the market closes.