Costco Gets Mixed Reviews From Wall Street Ahead of Earnings - TheStreet

Costco Gets Mixed Reviews From Wall Street Ahead of Earnings

Analysts offer mixed views of Costco's shares ahead of the retailer's earnings report on Thursday.
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Costco Wholesale  (COST) - Get Report rose Monday as analysts offered mixed views of the retailer's shares ahead of its earnings report scheduled for Thursday.

Rupesh Parikh of Oppenheimer has an outperform rating on the stock. “We look very favorably upon COST's long-term prospects,” he wrote in a report.

And why is he enthusiastic? “1) Unique and improving consumer value proposition; 2) open-ended worldwide growth prospects; 3) leading competitive position poised to continue to drive share,” Parikh said.

He added: “4) Consistent track record of shareholder returns; 5) strong management team; and 6) potential for sustainable top-and bottom-line delivery even against a more competitive retail backdrop."

With “a more accommodative valuation on a relative basis, the potential for well above peer top-line trends to continue, and prospects for a special dividend, we again see the case for outperformance,” Parikh said.

He has a price target of $335.

Oppenheimer’s Paul Trussell is less enthusiastic on Costco, with a hold rating. “We acknowledge a well-earned healthy premium for the stock vs. the 3-year average of 27.8x [price-earnings ratio], given a strong track record of operational excellence and the ongoing string of relatively robust comps,” he wrote in a report.

“However, we remain sidelined due to what we see as full valuation and difficult top-line and margin comparisons ahead,” Trussell added.

The analyst has a price target of $289 for Costco’s stock.

At last check, Costco traded at $288.50, up 2.62%. The shares have risen 28% over the last year, far surpassing the 5.9% gain for the S&P 500 index. 

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