Costco: A Mixed Q1 Expected
Analysts at UBS maintain their "Neutral" rating on Costco Wholesale Corporation (NASDAQ: COST) ahead of its F’Q1 Earnings with a 12 month price target of $59.
With headwinds from gas price deflation and FX dissipating, along with prospects for food price deflation to start easing in early C’10E, COST appears well positioned to show improved profit performance through C’10E. However, given the full valuation, we await a better entry point, the analysts says.
Ex fuel, we expect merch. margins could be stronger due to improved non food sales along with an easier compare for Fresh food. We think this may not, however, be enough to offset the aforementioned swing in fuel profitability. We forecast expense $ growth up in mid-teens, given benefits headwind. We expect positive comments on traffic, but with pressure of food and electronics pricing, we believe COST may give a muted outlook, they further added.
In Friday’s session, COST closed at $59.19.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Posted-In: UBSAnalyst Color Analyst Ratings