Costco Stock (COST): $405 Price Target By Loop Capital

By Amit Chowdhry ● October 11, 2020
  • Loop Capital analyst Laura Champine increased the stock price target of Costco Wholesale Corporation (NASDAQ: COST) from $395 to $405 earlier this week

Loop Capital analyst Laura Champine increased the stock price target of Costco Wholesale Corporation (NASDAQ: COST) from $395 to $405 earlier this week. And Champine also assigned a Buy rating on the company’s stock.

Champine noted that Costco saw better than expected September sales data with merchandise comps increasing at 17% vs. compared to her forecast of 14% and a consensus of 13%. And Costco’s growth and stability in membership fee increase (MFI) have warranted “modestly higher multiples” than the current valuation of 29-times expected FY22 earnings and enterprise value of 17-times the expected EBITDA wrote Champine in a research note to investors via TheFly.

Costco also recently received a higher price target from Evercore following the strong September sales report.

“Core comp strength shows solid momentum from its upper income household for back to school and into holiday selling season. Costco’s high turn/low margin loyalty driven model is validating during and we believe after the pandemic, with COST a favored stock for its compounder status. Risk remains for potential election related consumer malaise, winter wave Virus spike, and higher tax rates next year, yet Costco appears relatively well positioned for these risks relative to the rest of retail,” said Evercore in its report.

Evercore increased its annual EPS estimated by $0.05 to account for the company’s momentum and Selling, General and Administrative Expenses (SG&A) leverage off the stronger comps. Evercore’s base case price target was lifted to $390 from $370.

Disclosure: I have a small position in Costco