Goldman Says Buy Costco (COST)
Goldman Sachs is upgrading shares of Costco (NASDAQ: COST) to Buy from Neutral on improving fundamentals, a potential catalyst, and strong valuation. Goldman has a $68 price target on shares of Costco.
In the research note, Goldman says, "We are upgrading COST to Buy from Neutral based on three compelling dynamics: 1) improving fundamentals to drive EPS upside – better sales, accelerated unit growth and expense focus to drive op margin expansion, 2) potential catalyst on horizon – membership fee hike in 2011 to drive incremental EPS revisions, and 3) compelling valuation of 7.8x EV/EBITDA, well below historical average of 9-10x, does not properly discount the EPS upside potential of the aforementioned drivers."
Shares of Costco gained 7 cents yesterday to close at $58.64.
