Morgan Stanley Reiterates Overweight on Costco Wholesale

Morgan Stanley is out with its report today on Costco Wholesale COST, reiterating Overweight. In a note to clients, Morgan Stanley writes, "Costco reported an unusually large LIFO charge that muddied the quarter and caused some to believe earnings had missed expectations. Ex-the LIFO charge, Costco reported a solid quarter that beat consensus expectations. As core margins ex-gas and ex-LIFO showed healthy growth (+19 bp), the company levered SG&A (20bp better), traffic remains robust (+4%), and sales were stronger than expected as each month in the quarter was reported, this is a strong performance. We view the stock weakness caused by the LIFO confusion as a buying opportunity. We reiterate our Overweight rating on COST shares." Morgan Stanley has a $90 PT on COST. Shares of COST closed Wednesday at $80.32, down 1.27% from Tuesday's close.