Costco Wholesale Corporation COST reported fiscal third-quarter results that were ahead of expectations, driven by higher comps and lower COVID-19 costs, according to BofA Securities.
The Costco Wholesale Analyst: Robert Ohmes maintained a Buy rating for Costco Wholesale and raised the price target from $415 to $435.
The Costco Wholesale Takeaways: The company’s upbeat same-store sales were driven by both traffic and ticket gains, Ohmes said in a note.
“E-commerce comps increased 38.2%,” the analyst said. “SG&A as a % sales decreased 86bps (ex-gas) primarily due to lower COVID-19 costs ($44mn in F3Q21 vs. $239mn LY).”
Ohmes raised BofA's Costco earnings estimate for fiscal 2021 from $9.75 per share to $10.30 per share.
“We continue to expect comps to moderate into F4Q as comparisons become more difficult and 'return-to-normal' trends continue,” the analyst said.
Costco Wholesale’s comps and margins should continue to be supported by the following, he said:
- Continued decline in COVID-19 related costs
- New club growth
- Ancillary growth, including the reopening of food court
- Continued integration of Innovel (now Costco Logistics)
COST Price Action: Shares of Costco Wholesale were down 2.43% at $378.10 at last check.
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