Citi Initiates Costco At Buy

Analysts at Citi Research initiated coverage on Costco Wholesale Corporation COST with a Buy rating and $150 price target Monday.

Oliver Chen highlighted factors that may yield upside in shares of Costco:

Costco provides high-end products for affordable prices. Costco offers a low markup rate of ~11% on high quality products.

Unique subscription model drives profitable growth. Analysts expect membership fees to continue providing an “annuity-like” cash flow given a loyal customer base.

Chen also believes Costco has several years of low-risk growth ahead. Chen Stated, “We believe COST is poised to deliver consistent 9-13% earnings growth.” Costco plans to develope 30 or more stores annually.

Shares of Costco recently traded at $126.15 up 0.66 percent