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UPDATE: BMO Capital Markets Assumes Coverage on Costco Wholesale Corporation with Outperform Rating, $115 PT

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In a report published Monday, BMO Capital Markets assumed coverage on Costco Wholesale Corporation (NASDAQ: COST) with an Outperform rating (previously Market Perform) and $115.00 price target.

BMO Capital noted, “As of November 5, we are assuming coverage of Costco with an OUTPERFORM rating and introducing a $115 price target. The rationale for our rating is the following: 1) we estimate lease-adjusted ROIC was ~18% in FY2012 but will increase to ~21% in FY2015 and we believe this will result in multiple expansion – we factor this expansion into our price target methodology; 2) we believe COST can more than double units (from the current 612) especially when we consider unit expansion opportunities in Europe; 3) given the expansion opportunities and superior price image, we view Costco as a best-in-class, global retailer and this stature warrants a premium valuation; 4) we believe share gains (vs. Sam's Club and BJ's Wholesale) have accelerated as evidenced by traffic trends; 5) unit growth will be self-funded – the net cash balance stood at $3.5 billion at 4Q12; and 6) ~79% of the store base is owned – this owned real estate also supports a premium valuation.”

Costco Wholesale Corporation closed on Friday at $96.12.

Latest Ratings for COST

DateFirmActionFromTo
Feb 2017SusquehannaInitiates Coverage OnPositive
Feb 2017BernsteinInitiates Coverage OnMarket Perform
Jan 2017Stifel NicolausInitiates Coverage OnBuy

View More Analyst Ratings for COST
View the Latest Analyst Ratings

Posted-In: BMO Capital MarketsAnalyst Color Upgrades Analyst Ratings

 

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