Citigroup Offers Three Key Points To Watch For In Costco Over The Coming Quarter

Costco reported Q3 EPS $1.24 versus estimates of $1.22 in the morning on Thursday.

After hours Citigroup issued a note pointing to concerns surround Costco's COST same-store sales and listed the point of contention for investors looking out to Q4.  Citi's Kate McShane sees the primary driver of SSS deceleration as deflationary trends with in the food and sundries category.

McShane lists the focus points that will need to be addressed to appease investors:

• Whether June 20 expected launch of US co-branded credit cards spurs SSS growth.
• How material the benefits are from the new card to gross margins "via bounty revenue from new sign-ups
• Whether membership fees should be expected to increase along with a possible special dividend payment in 2017.

McShane maintains a Neutral rating on Costco and lifts the price target $1 to $155.

Shares of Costco closed Thursday's session up $5.17 to $149.71, which equates to a gain of 3.28 precent.