Jefferies Has Buy Rating On Costco (COST)

Jefferies & Co. has a Buy rating and a $79 price target on Costco COST, as the company is set to report earnings tomorrow. In a note sent to investors, Jefferies writes, "We believe the market is already factoring in good Q1 results, which we think are likely in line absent any unexpected FX benefits. However, over 12 months, we think shares move higher reflecting better discretionary product sales, food re-inflation, potential membership fee increase, and re-acceleration of store growth." Jefferies goes on to say, "Trends through the month of November put week 1 at the strongest gain and week 4 at the softest gain. This in part reflected the timing of coupon book promotions and softer relative promotions in week 4 (week 4 started the Q2 period). We think the same shift of coupons put December's week 1 off to a good start, so we are expecting management to indicate that early Q2 results are in line. Based on our conversations with the company last week, we believe holiday related goods are selling well and inventory should be clean even as management upped its commitment to the space this year." Shares of COST gained 80 cents yesterday to close at $69.19, a gain of 1.2%.