Retailer Costco delivered an earnings beat but investors seemed disappointed it didn't raise membership fees. Wall Street analysts are upbeat, though.
Costco Wholesale’s earnings report won rave reviews from Wall Street analysts. An initial fall in its share price suggested investors were disappointed by the lack of a membership fee increase, but that could offer a future catalyst.
That reversed an earlier fall in after-hours and premarket trading when investors appeared to react with disappointment that the retailer hadn’t increased its membership fee.“With what we continue to view as the highest barriers to entry in all of retail due to its immense buying power and extreme value offering, as well as the potential for an eventual membership fee increase…we remain aggressive buyers of Costco,” wrote Truist analyst Scot Ciccarelli.
Newsletter Sign-up Costco has held its fee flat at $60 for its entry-level membership, and $120 for a premium version since 2017. That had some analysts scheduling a raise around now, but company executives refused to commit to a timeline for a raise on Tuesday in an earnings call. Even without the catalyst of a membership-fee increase, analysts are seeing value in the stock. BMO Capital Markets analyst Kelly Bania said a new target price of $612, based on a price-to-earnings ratio of 36 times Costco’s forecast 2025 profit, didn’t include any uplift from a fee increase.
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