A Costco store in Novato, Calif.
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Costco Wholesale will report May same-stores sales on Thursday, and the shares got a price target increase ahead of the news. Oh, and free samples are back.
Wells Fargo analyst Edward Kelly reiterated an Overweight rating on Costco Wholesale (ticker: COST) ahead of the comparable-sales data, while raising his price target to $415 from $400. “Costco was a clear Covid-19 winner on fundamentals but we believe there is reason to believe it may be a subtle way to play the reopening as well,” he wrote.
He sees a number of potential catalysts, including a resurgence in growth from business customers who should get a lift from the return of restaurant dining, a resumption of family and other gatherings driving sales, and recent membership gains that should help it retain market share. And while the shares aren’t cheap, trading at 34 times his 2022 earnings per share estimates, Costco is still off its peak valuation levels, Kelly notes.
Costco was up fractionally, at $379.70, in recent trading, as is the S&P 500. The stock has edged up 0.4% year to date and has gained 23% in the past 12 months.
While the news comes too late to affect May same-store sales, Costco also announced that it’s bringing back sample stations this week, with an aim to have the program up and running at all locations by the end of the month. Costco had originally suspended its well-known free samples in early 2020 in response to the pandemic. Walmart’s (WMT) warehouse division Sam’s Club also said it was bringing samples back to stores earlier this week.
Write to Teresa Rivas at [email protected]
