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.