Costco's Steady Growth Potential: Analyst Forecasts Modest November Trends With Long-Term Optimism

Costco Wholesale Corporation COST remains a top pick for Oppenheimer analyst Rupesh Parikh into 2024. (Outperform rating and a price target of $630)

COST will report November sales on the 29th and Q1 earnings on December 14.

In recent years, U.S. comp trends at COST have stepped down in November from October, says the analyst.

The analyst added that recent retailer reports point to an ongoing challenging discretionary backdrop, which further supports the views.

Based on the analyst’s November U.S. comp forecast of +3%, 5.5% point moderation is expected in four-year adjusted trends to +30.9% from +36.4% in October.

Additionally, while the analyst believes a potential membership fee increase and a special dividend still represent potential positive catalysts down the road, there is a lower probability of these occurring by the end of 2023.

Hence, the analyst recommends investors buy on weakness versus playing for a positive catalyst on the upcoming reports.

Unique and improving consumer value proposition, open-ended worldwide growth prospects, and consistent track record of shareholder returns make the analyst favorable on COST for the long term.

Price Action: COST shares are trading higher by 1.01% at $590.21 on the last check Wednesday.