The firm assumed coverage of the Issaquah, WA-based membership warehouse operator with an "equal weight" rating.
Along with companies like Kroger (KR) and Walmart (WMT), Barclays said it considers Costco to be a "stable staple."
"We look for whether a company's strategy can generate or reduce shareholder value in the context of a growing top line and increasing return on invested capital (ROIC), as in most cases there is a very high correlation between stock price performance and ROIC," the firm said in an analyst note.
The firm noted that Costco's go-to market and capital-deployment strategy seems appropriate and sustainable.
However, the third quarter is set to be the "most challenging for food retailers in well over a decade" as they face continued deflation, Barclays added.
Baird said it recommends buying Costco on its pullback because the shares offer a "compelling value proposition," according to TheFly.
The firm has an "outperform" rating and $175 price target on Costco.
Costco's membership model remains a positive in today's challenging retail world, the firm noted.
The retailer should see better traffic and sales later this year as comps ease and members "recognize the benefits" of the new co-branded Visa (V) credit card.
TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning that Costco "went up a great deal" when they left American Express (AXP) and partnered with Visa.
(Costco is a holding in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holding with a free trialhere.)