UPDATE: Bank of America Color on Costco PO Increase

Bank of America, which raised its PO on shares of Costco Wholesale Corporation COST, is providing some color on the stock. “Recent reports from Sam's Club & BJ's BJ suggest that warehouse channel trends are robust, & we believe Costco continues to outperform within the channel,” Bank of America writes. “Sam's reported strong calendar 1Q +4.2% comps (x-fuel) w/ traffic +2.3% & flat GM% (x-fuel); BJ's +2.4% comp (x-fuel) was driven by +2% traffic growth & merchandise margin growth of +27bps (x-fuel). “Costco's customer traffic trends cont to outpace the channel, trending +4-5% over the past 2 yrs (vs historical range of ~2%). Given strong industry trends & solid margins along w/ better than expected core-comps in March & April, we are raising our F3Q11E EPS by 2c to $0.76; F11E moves to $3.35. We are shifting our PO $92 to be based on our F13E EPS (vs. F12 prior) based on 21-22x our revised $4.35EPS (up from $4.24).” Costco Wholesale Corporation closed Friday at $83.40.