UPDATE: UBS Investment Research Downgrades Costco Wholesale Corporation to Neutral, Reiterates $124 PT on Perpetuity Paradigm Properly Priced

In a report published Tuesday, UBS Investment Research analyst Jason DeRise downgraded the rating on

from Buy to Neutral, but reiterated the $124.00 price target. In the report, UBS Investment Research noted, “Costco has one of the most attractive retail business models, globally. Our core thesis is that Costco's valuation is entirely derived by its membership fee income (MFI), which should be viewed as a growing perpetuity. Over the last 10 years it has averaged an 8%-9% growth rate in MFI driven by store openings, members per store growth and increases in the membership fee rate every 5-6 years. We expect this growth rate to continue. But, we now believe the market is fully reflecting this growing perpetuity.” Costco Wholesale Corporation closed on Monday at $123.02.