Costco Wholesale Corporation (COST) is drawing intense analyst attention ahead of its fiscal third-quarter earnings report on May 28, with multiple Wall Street firms lifting price targets and institutional investors piling in. Oppenheimer raised its target to $1,160 from $1,100, maintaining an Outperform rating and naming the stock a top pick. UBS has a $1,175 target, Bank of America rates it a Buy with a $1,185 target, and Goldman Sachs trimmed its target slightly but kept a Buy. Of 34 analysts tracked, 22 rate the stock a Buy, 11 a Hold, and just one a Sell, with a consensus average target of $1,047.27.
Shares opened at $1,076.47 on Tuesday, up 2.6%, and later touched $1,094.32, within striking distance of the 52-week high of $1,096.50. The market cap stands around $485 billion, and the P/E ratio hovers near 56. Strong April sales data fueled optimism: net sales rose 13% year-over-year, comparable sales climbed 11.6%, and digital sales jumped 18.8%. The company also declared a 13% dividend increase to $1.47 per share, marking the 22nd consecutive year of hikes, paid on May 15.
Membership renewal rates remain the critical metric. After peaking at 90.5%, rates slipped as digital sign-ups — which renew at lower rates — grew. However, rates have stabilized at approximately 89% for two straight quarters, which the market appears to view as sufficient. Membership fees, with near-100% margins, likely account for more than half of operating profit, making renewal trends central to the stock’s valuation. Institutional investors now own over 68% of the float, with ProShare Advisors boosting its stake by 38.6% in Q4 and PNC Financial Services adding 44,684 shares.
Oppenheimer also noted that a potential special dividend or stock split could serve as additional catalysts. While the upcoming earnings report may show transitory margin pressure from fuel costs, the overall narrative remains constructive, supported by steady comparable sales growth, a loyal membership base, and consistent dividend increases.
