Costco (COST) - Get Report shares were rising slightly Thursday after the Issaquah, Wash., big-box retailer reported a jump in August sales. The company benefited from consumer spending patterns during the coronavirus pandemic.
The analyst community was favorable to the company ahead of Thursday's release. Here's what analysts at Oppenheimer, Deutsche Bank and Stifel had to say about Costco.
Oppenheimer (Outperform Rating Affirmed, PT Raised to $400 from $380)
"We look very favorably upon COST's long-term prospects. A few key factors underpin our views: 1) unique and improving consumer value proposition; 2) open-ended worldwide growth prospects; 3) leading competitive position poised to continue to drive share gains; 4) consistent track record of shareholder returns; 5) strong management team; 6) potential for sustainable top- and bottom-line delivery even against a more competitive retail backdrop; and 7) prospects for a special dividend."
- Rupesh Parikh
Deutsche Bank (Hold Rating, $302 PT Unchanged)
COST reported very strong August sales, with core same-store sales up 14.5% vs. [Deutsche Bank estimate] 12.4% and compared to 15.8% in July as the sequential improvement in hard lines (increased an eye-popping high-20s led by major appliances, electronics, garden, and sporting goods), soft lines, and ancillary more than offset a deceleration in food categories. Notably, August comparable sales were negatively impacted by [0.75 percentage point] in the U.S. and a little over [0.5 percentage point] globally by the shift in Labor Day (fell in the August selling period last year).
Stifel (Buy Rating Unchanged, PT Raised to $375 from $360)
August comparable was once again above expectations, wrapping up the fiscal fourth quarter with three monthly beats versus consensus. Strong comparable sales were led by improvements in hard lines and soft lines. Positively, e-commerce growth of 101.6% is a notable reacceleration versus the prior two months and indicates that Costco’s e-commerce options continue to gain traction.
We believe Costco remains a best-in-class retailer, with continued reinvestment appropriate to sustain outperformance of peers. We anticipate the company will continue to invest in price and e-commerce to reinforce its value proposition.