Jefferies Positive On Costco After Channel Checks (COST)

Jefferies & Co. is positive on Costco COST after the investment bank did channel checks during the Black Friday shopping period. It has a Buy rating on shares. In a note sent to investors Jefferies writes, "We are expecting core comp store sales at Costco to come in around 5-6% (ex-gas and fx) and core US comp store sales to be about 4-5% (ex-gas). Our core comp store sales estimates exclude a 100 bps total company benefit (80 bps in the U.S.) from gas and a 100 bps benefit from currency translation. We are forecasting an International local currency comp store sales gain of 7-9%. On a reported basis, we expect US comp store sales to be about 5-6% and International comp store sales to be 11%-13% or about a 6-7% total company comp store sales gain. The consensus estimate currently stands at 6% for total company and this month there is a consensus US estimate ex gas of 4%. Our longer-term optimism on the name reflects a recovery in discretionary product sales, food re-inflation, easing sales comparisons, strong franchise value and market position, potential membership fee increase, and re-acceleration of store growth the next few years." Shares of COST finished at $66.97 yesterday, down 25 cents.