Tigress Financial Partners Downgrades Costco

Tigress Financial Partners downgraded Costco Wholesale Corporation COST from Strong Buy to Buy in a report issued Wednesday.

Analyst Philip Van Deusen cited valuation as the reason for the downgrade.

"EV/EP and Future Growth Value (FGV/MV) are both near their 5 year highs and at 26x Costco’s EV/NOPAT is a historic high for the company...we are tempering our upside expectations given these valuation concerns and consequently downgrading the stock," according to Van Deusen.

Van Deusen thought "upside from these levels will be limited in the near-term because of Costco’s high valuation and would wait for a pullback to buy shares given our overall upbeat outlook on Costco’s long-term growth prospects."

The report concluded that "Costco continues to exhibit strength in a challenging retail environment, total sales for the 4Q were up 9 percent Y/Y and comp sales grew 6 percent. Growth opportunities persist as management is targeting 31 new warehouse openings for fiscal 2015, 19 of which will be in the US."

Costco recently traded at $131.56, up 0.38 percent.