Costco Exceeds Expectations With 4.5% September Sales Growth: Analyst Raises Price Target To $600

Telsey Advisory Group analyst Joseph Feldman reiterated an Outperform rating on the shares of Costco Wholesale Corporation COST and raised the price target from $575 to $600.

Costco reported better-than-anticipated September total comparable sales growth of 4.5% versus the analyst's view of 3.8%.

In September, total traffic increased +4.9% while the average ticket fell 0.3%. The ticket decrease was related to softer sales of discretionary products, partly offset by gains from higher fuel prices, said the analyst.

Costco's digital business is skewed toward discretionary categories, which is still dragging the growth, added the analyst. 

Looking ahead, the analyst said the enhancements to Costco.com and its mobile app, the expansion of its Costco Next.com program, and leverage of member data to undertake targeted marketing should help results.

Costco is executing well in this uncertain operating environment and the analyst expects the company to remain a share gainer with its solid sales and high membership renewal rates.

In FY24, Costco should continue to generate solid EPS growth, driven by a mid-single-digit comp, MSD-HSD membership fee income growth, leverage of customer data, and effective management of merchandising and costs, concluded the analyst.

Price Action: COST shares are trading lower by 0.40% at $569.52 on the last check Thursday.