COST Margins to Improve

Analysts at Morgan Stanley maintain their "overweight" rating on Costco Wholesale Corp (NASDAQ: COST)(FREE stock trend analysis). The target price for COST is set to $64.

The company has reported its F1Q10 EPS in-line with the estimates and marginally ahead of the consensus. Although margins and earnings were low during the quarter, Costco Wholesale is expected to return to growth during the next couple of quarters.

According to Morgan Stanley, operating leverage from non-food sales and strong sales during this holiday season will drive Costco Wholesale’s margins. Any improvement in COST’s margins would lend upside to the company’s stock.