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

In a report published Monday, BMO Capital Markets assumed coverage on Costco Wholesale Corporation

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.