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Costco Eases as Analysts See Softness in Sales Data

Costco shares eased on Thursday after analysts saw signs of softness in the sales data the membership-based warehouse retailer reported.
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Costco  (COST) - Get Costco Wholesale Corporation Report shares eased on Thursday after analysts saw signs of softness in the sales data the membership-based warehouse retailer reported.

Shares of the Issaquah, Wash., company recently traded at $376.40, down 1.9%. But the stock has climbed 28% year to date amid strong consumer demand during the coronavirus pandemic.

Deutsche Bank analysts have a hold rating on the stock, with a $328 price target. 

“Costco reported strong November sales, albeit softer than the prior two months, with core same-store sales up 14.6% vs. a Deutsche Bank [expectation] of 15.1% and compared to 16.5% in October, … as hardlines decelerated to mid-teens growth,” they wrote in a commentary.

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Oppenheimer analysts have an outperform rating on Costco, with a $400 price target. 

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“The softer growth appears to be driven by the consumer electronics category, which has experienced very robust growth since May,” they wrote in a commentary.

“As a result, we believe the slowdown could have been impacted by a pull-forward in demand. U.S. traffic remained robust, increasing 8.4%. [Given that the shares are] trading essentially consistent with all-time highs, we would expect some weakness [Thursday]. Costco remains a top pick for us.”

J.P. Morgan analysts have an overweight rating on Costco, with a $406 price target.

“Despite strong stock-up behavior, we believe there was some moderation in the comparison trend late in the month on a softer Black Friday weekend year-on-year, due to social distancing and an October/early November pull-forward in holiday demand starting with Prime Day from November.”

Still, “we believe Costco continues to be a core holding,” the analysts said.

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

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