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Costco Jumps on Wells Fargo 'Overweight' Upgrade, Jim Cramer Support

Wells Fargo echoes Jim Cramer's view that the recent pullback in Costco shares presents a solid buying opportunity for the giant bulk-price retailer.

Costco Wholesale  (COST) - Get Costco Wholesale Corporation Report shares bumped higher Thursday after analysts at Wells Fargo boosted their price target and Jim Cramer repeated his support for the bulk-focused retailer. 

Wells Fargo analyst Edward Kelly upgraded Costco to 'overweight', with a price target of $370, citing solid membership growth an potentially "sticky" market share gains from the now-fading pandemic, adding that recent pullback in shares could be a buying opportunity 

Kelly's view closely echoes that of TheStreet's founder, Jim Cramer,  who noted that under-control COVID costs, store expansion plans and a solid second quarter earnings backdrop have that stock at levels about as cheap as I have ever seen".

"Costco are going to open a slew of stores in the second half, something that always drives profitability because it makes the most money off its membership cards and there are now 108 million cardholders, most of whom would gladly pay more if they were asked given how much they save shopping there," Cramer said in a recent update on his Action Alerts PLUS charitable trust. "You've got 14% sales growth, an unheard-of number for most stores but just plain-old consistently terrific for Costco."

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Costco shares were marked 1.5% higher in early afternoon trading Thursday to change hands at $328.60 each, a move that would trim its six-month decline to around 3%.

Earlier this month, Costco said earnings for the three months ending on February 4, the group's fiscal second quarter, rose 2% to $2.14 per share, but fell well shy of the Street consensus forecast , thanks in part to a 41 cents per share hit linked to wage increases and COVID safety costs. 

Revenue, however, rose 15% from last year to just under $44 billion, with comps rising 13% while e-commerce sales surged 75% from the same period last year.

Costco is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stock? Learn more now.