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
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