- Telsey Advisory Group analyst Joseph Feldman reiterated an Outperform rating on the shares of Costco Wholesale Corporation COST with a price target of $540.
- Costco reported a softer-than-expected March comparable sales decline of 1.1%, missing the analyst’s forecast of 1.5%.
- Excluding the gas and FX net headwind of about 370 basis points, the core merchandise comparable sales came in at 2.6% versus the analyst’s projection of 4.0%.
- In March, total traffic increased 4.6%, while the average ticket fell 5.8% due to soft sales in big ticket products, like furniture and electronics.
- E-commerce sales decreased 12.7% versus growth of 8.9% last year, reflecting its skewed nature toward discretionary categories like electronics and furniture, which were soft in this tough economic environment.
- The analyst projects an April comp of 2.5% versus 12.6% last year, with a gas and FX net headwind of 250 basis points.
- While March was pressured by discretionary weakness, Costco continued to generate strong traffic driven by consumables, noted the analyst.
- The analyst expects Costco to remain a share gainer, with its value-focused merchandising and high member loyalty.
- In FY23 and FY24, Costco should continue to generate double-digit EPS growth, driven by a mid-single digit comparable sales, high-single digit membership fee income growth, leverage of customer data, and effective management of merchandising and costs.
- Price Action: COST shares are trading lower by 2.46% at $484.92 on the last check Thursday.
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COSTCostco Wholesale Corp
$992.42-0.66%
Edge Rankings
Momentum
84.97
Growth
57.61
Quality
77.74
Value
20.62
Price Trend
Short
Medium
Long
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