NEW YORK (TheStreet) -- Shares of Costco Wholesale Corp. (COST) - Get Costco Wholesale Corporation Report closed higher by 0.23% to $150.03 on Monday as JPMorgan analysts said the company's period of high uncertainty regarding a membership fee increase will pass quickly.
The Issaquah, WA-based company's traffic trend has turned more volatile in recent months, the firm said in a note cited by Barron's.
"With a stock that trades on the consistency of its sales (particularly traffic), investors are rightly nervous, in our view. Most importantly, the potential membership fee increase in calendar 2017 hangs in the balance... But, this too should pass with clarity coming relatively quickly," JPMorgan said.
"If traffic weakens further in the U.S. against easier comparisons starting in March, it becomes highly unlikely that management would raises fees," the firm added.
So far this year, Costco stock has underperformed the S&P 500 due to concerns about its ability to increase its membership fees and volatile sales, Barron's noted.
Additionally, American Express (AXP) said today that it will sell its Costco U.S. co-branded card portfolio to Citigroup's (C) consumer unit Citibank by June.
This will help to reduce the uncertainty around the transition, Barron's said.
Costco and American Express failed to reach an agreement on a new contract last year. The companies' U.S. partnership is set to expire at the end of March.
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Separately, TheStreet Ratings Team has a "Buy" rating with a score of A- on the stock.
This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks rated.
The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, largely solid financial position with reasonable debt levels by most measures and solid stock price performance.
The team believes its strengths outweigh the fact that the company shows weak operating cash flow.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: COST