Bernstein SocGen Group has increased its price target for Costco Wholesale to $1,155 from $1,146 while retaining an Outperform recommendation. The research house highlighted Costco’s extended runway for growth outside the U.S. as a central input to its revised valuation model, which translates into roughly 25% upside from current levels.
The company carries a market capitalization of $444 billion and its shares have advanced by more than 16% year-to-date. Bernstein’s update comes amid mixed valuation signals: the stock is trading at a price-to-earnings ratio of 53.45, and technical indicators point to overbought conditions. Analyses comparing the share price to a calculated Fair Value show the stock appearing overvalued on those measures.
On the operational side, Bernstein observed that U.S. comparable-store sales have settled into the mid-to-high single-digit percentage range despite challenging year-over-year comparisons. The firm anticipates that top-line comparisons will become easier in the second half of the year, and it expects membership renewal rates to strengthen over that period.
Bernstein added that these fundamental trends, together with the prospect of a special dividend, could help sustain momentum in Costco’s shares.
Recent company results provide context for the analyst activity. January sales rose 9.3% to $21.33 billion from $19.51 billion in the same month last year. For the first 22 weeks of the fiscal year, net sales totaled $123.16 billion, up 8.5% compared with the prior year.
Other broker moves mirror a generally constructive view of Costco’s sales trajectory. Mizuho raised its price target to $1,065 and maintained an Outperform rating, citing expectations for continued strong sales momentum. DA Davidson reiterated a Neutral rating with a $1,000 price target while noting a 7.1% gain in total comparable sales for January.
On the international and fulfillment front, Costco expanded its partnership with Instacart into Europe by launching same-day delivery services in France and Spain through dedicated websites. This expansion marks Instacart’s first entry into those markets and allows Costco members in both countries to place orders for delivery from any Costco location in the respective nations.
Taken together, the analyst updates, sales figures, and the rollout of same-day delivery in new markets highlight Costco’s ongoing efforts to bolster sales performance and broaden its international footprint. At the same time, elevated valuation multiples and technical readings suggest investors are weighing growth prospects against a stretched share-price backdrop.
Summary
Bernstein raised its Costco price target to $1,155 and kept an Outperform rating, citing international growth potential and improving membership dynamics as drivers for upside, while valuation metrics and technical indicators flag overbought conditions.
Key points
- Bernstein increased its price target to $1,155 from $1,146 and maintained Outperform - impacts equity investors and analyst coverage of retail stocks.
- January sales rose 9.3% to $21.33 billion and net sales for the first 22 weeks climbed 8.5% - relevant to retailers and consumer staples sectors.
- Costco expanded same-day delivery with Instacart into France and Spain, underscoring e-commerce and logistics implications for international retail operations.
Risks and uncertainties
- High valuation metrics - a P/E of 53.45 and comparisons to Fair Value indicate potential overvaluation risk for equity investors in the retail sector.
- Technical indicators showing overbought conditions - market-timing and momentum traders may face increased volatility in Costco shares, affecting short-term market dynamics.
- Reliance on continued membership renewals and easing year-over-year comps - if renewal rates or top-line comparisons do not improve as expected, sales momentum could decelerate, impacting retail and consumer discretionary performance.