Deutsche Bank Previews Costco's Q2 Earnings & February Results

In a report published Tuesday, analysts at Deutsche Bank previewed Costco Wholesale Corporation's COST fiscal second quarter 2015 and February earnings. Given the company's history retrieving industry-leading results on a regular and consistent basis, the firm expects "core fundamentals to remain strong, with healthy traffic trends and operational excellence led by a well respected management team."

However, the analysts "believe FX/gas headwinds over the next several months will derail comps into negative territory and stunt EPS growth." Therefore, they rate Costco shares as a Hold, under the belief that "valuation will be constrained along with the top line," and fix a price target of $142

Shares traded at $147.38 near Tuesday's close.

The Estimates

For the second quarter, Deutsche Bank models EPS of $1.17, $0.01 below consensus. Its revenue forecast is based on sales rising 3.7 percent year-over-year to $26.7 billion (1.6 percent same-store sales) and MFI expanding 7.0 percent.

For February, the analysts project comp growth of 0.7 percent, "including gas, FX, Lunar Year calendar shift, and inflationary impacts."

For the full year, the EPS estimate was raised from $5.15 to $5.17 on the back of "slightly less unfavorable FX rates and gas prices, as well as lower than expected interest expense on the debt offering announced 2/5." For 2016, the estimate ascends to $5.92.