Costco Stands Strong Despite Revenue Dip, Core Shopping Drivers Intact: 4 Analysts On FQ3 Print

Shares of Costco Wholesale Corporation COST recovered slightly in early trading on Friday, after having declined in the premarket and during after-hours trading the previous day on its revenue miss.

The report came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Bernstein On Costco Wholesale

Analyst Dean Rosenblum maintained an Outperform rating, while reducing the price target from $568 to $555.

Costco Wholesale reported mixed quarterly results, but the biggest picture remains unchanged, Rosenblum said in a note.

The company’s key staples categories of Food & Sundries and Fresh generated mid-single-digit growth, despite slower food inflation, which indicates that “the drivers of why Costco members shop at Costco appear intact,” the analyst stated. “Two biggest drivers of top-line softness are not unique to COST, and won't last forever,” he added.

Truist Securities On Costco Wholesale

Analyst Scot Ciccarelli reiterated a Buy rating, while lowering the price target from $568 to $567.

Although Costco Wholesale’s top line was “modestly soft,” its earnings were “solid” because the company “can manage margins better than most,” Ciccarelli wrote in a note.

The company’s pricing model can “sustain margins in the face of mix shifts,” the analyst stated. “We suspect that Costco will emerge from the current consumer spending slowdown with an even higher market share,” he added.

Check out other analyst stock ratings.

BMO Capital Markets On Costco Wholesale

Analyst Kelly Bania reaffirmed an Outperform rating and price target of $555.

Costco Wholesale generated strong quarterly earnings, driven by better-than-expected gross margins, “despite a weaker top-line quarter, given known pressures from big-ticket sales,” Bania said.

“Importantly, COST's renewal rates remain very strong & steady and Costco's advantaged business model continues to support a premium valuation,” the analyst further wrote.

Oppenheimer On Costco Wholesale

Analyst Rupesh Parikh maintained an Outperform rating and price target of $550.

“COST reported Q3 bottom line results slightly ahead of expectations, with adjusted EPS of $3.43 vs. a $3.29 consensus figure,” Parikh said. “Compared with our model, better gross margins more than offset higher expenses,” he added.

“A membership fee increase and a special dividend still likely represent positive catalysts down the road, in our view,” the analyst further stated.

COST Price Action: Shares of Costco Wholesale were up 2.1% to $497.02 at the time of publishing Friday.