Costco dances around a $1,000 trading handle as analysts eye the 2025 potential

Costco Wholesale (NASDAQ:COST) keeps landing higher price targets from analysts that see a path through the high trading multiples. Since reporting earnings last week, Morgan Stanley boosted its price target to $1,150 and BMO Capital Markets moved its PT to a Street high of $1,175.

MS analyst Simeon Gutman and his team think Costco’s (COST) value proposition is helping it to continue to gain market share as it leverages its scale to deliver newness and value to a healthy upper income consumer. Costco (COST) was noted to be taking share in discretionary categories where others struggle, as witnessed by its double-digit growth in home goods, sporting goods, beauty, appliances, and electronics. Gutman said the firm is also encouraged by early reads on holiday sell-through, despite the shortened shopping calendar.

Looking ahead, Costco’s (COST) earnings momentum is anticipated to continue to accelerate over the next few quarters, as the value proposition resonates with a healthy upper-income consumer, foundational e-commerce work performed in years past raises conversion rates, and the membership fee increases start flowing through to the P&L statement.

Notably, Morgan Stanley is not incorporating any upside from the media business into estimates at this time, but highlighted that the long-term opportunity could be significant because media has become a material contributor of high margin revenue at Walmart (WMT), Target (TGT), and Kroger (KR).

On Seeking Alpha, analyst Amrita Roy is a short-term bear on Costco (COST), “I am rating Costco a sell with a price target of $832, as its current valuation fully prices in projected FY25 revenue and operating income growth of 10% and 28% YoY, respectively,” wrote Roy.

Costco (COST) has broken through the $1,000 level a few times since its FQ1 earnings report, but was swapping hands at ~$986 at last check. The all-time high for the retail stock is $1,008.25.