UPDATE: Bank of America Raises PO to $98 on Costco Wholesale Corporation on Purchase of Mexican Subsidiary Stake
Bank of America reiterates its Buy rating on Costco Wholesale Corporation (NASDAQ: COST) and raises its price target from $92 to $98.
Bank of America says, "COST recently announced plans to purchase the remaining 50% stake in Costco Mexico from Controladora Comercial Mexicana, S.A.B. de C.V. ("CCM") for $10,650 million MXN (roughly $760.4mn in USD on an exchange rate of 14.006 pesos to the dollar). Costco Mexico has declared a cash dividend of roughly $4,774mn MXN (roughly $340.85mn in USD), 50% payable to a subsidiary of Costco Wholesale and 50% to CCM, of which COST will use the dividend proceeds and existing cash and investment balances to fund the purchase. We do not expect any significant changes to management and COST expects roughly 3% EPS accretion on an annualized basis to result from this transaction. As a result, we have raised our F13 EPS estimate to $4.45 (from $4.35)."
COST closed at $91.44 on Friday.
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