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Costco Stock: What Does Analysts’ Target Price Indicate?

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Jun. 17 2019, Updated 1:25 p.m. ET

Analysts’ rating and target price

Most of the analysts continue to suggest a “buy” on Costco (COST) stock due to the company’s ability to drive traffic amid heightened competitive activity. Among the 29 analysts covering Costco stock, 17 recommended a “buy,” while 12 recommended a “hold.” Analysts have a target price of $256.46 per share on Costco, which implies a downside of 3.0% based on its closing price of $260.15 on June 14.

Costco’s impressive comps and strong EPS growth supported its stock. However, the recent uptrend in Costco stock and rich valuation could limit the upside.

Besides Costco, most of the analysts recommended a “buy” on Walmart stock. However, analysts remain on sidelines on Target (TGT) stock.

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Analysts’ projection

Analysts expect Costco’s comps to continue to grow at a decent rate and drive mid to high-single growth in the company’s net sales. Costco’s expanded offerings and value pricing will likely drive its traffic and comps. The higher membership fee income should support Costco’s sales growth.

However, Costco’s margins could stay pressured, which would reflect price investments. Analysts expect Costco’s EPS to benefit from continued growth in the base business. However, the earnings growth rate will likely decelerate. Tough year-over-over comparisons and an increase in the effective tax rate are expected to impact Costco’s bottom-line growth.

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