UPDATE: BMO Capital Markets Upgrades Costco to Market Perform, Raises PT
In a report published Monday, BMO Capital Markets upgraded its rating on Costco Wholesale Corporation (NASDAQ: COST) from Underperform to Market Perform, and raised its price target from $75.00 to $106.00.
BMO Capital noted, “A central fundamental tenet of our UNDERPERFORM thesis was our concern about contraction in the company's core gross margin rate and the risk it posed to maintaining margin, ex-membership fee income. While core margin rate came under pressure over the past six quarters, the rate of pressure has moderated sequentially, leaving us less concerned. Moreover, 4Q12 operating margin, ex-MFI, improved sequentially on favorable expense leverage, and worldwide renewal rates were up slightly to 86.4% despite the November 2011 fee increase.”
Costco Wholesale Corporation closed on Friday at $97.55.
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