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What you need to know
- Costco's net sales during the five-week December period improved 10% year-over-year.
- Holiday period sales beat analysts' expectations amid improving consumer spending environment, JPMorgan said.
- Citi analysts said they expect the stock to see "modest strength" after shares pulled back from a record high last month.
Costco Wholesale’s (COST), which is a wholesale retailer, posted sales numbers for the holiday season on Wednesday. These figures blew away analysts’ predictions.
Membership-based retailer, The Home Depot reported that net sales were $27.52 billion for the period of five weeks ending Jan. 5. This is an increase of 10% over last year. U.S. sales comparables increased more than 9 percent and online sales surged 34%. “positively impacted by an estimated 15 percentage points, due to Thanksgiving / Black Friday / Cyber Monday occurring a week later this year.”
JPMorgan analysts reiterated an "overweight" rating for the company's stock, but lowered their price target to $1,065 from $1,090. Shares of Costco closed Wednesday trading at $927.37, making JPMorgan's target a roughly 15% premium. Visible Alpha reports that the analyst consensus is $1 047.06.
The results were "strongly above" Street expectations, JPMorgan said, indicating an improving "consumer spending backdrop, particularly the upper-middle class and higher-income consumer."
Citi Expects Costco Stock to See 'Modest Strength' After December Sales Figures
Citi analysts expect Costco stock to see "modest strength" following the December results, particularly as shares have fallen 7% since hitting an all-time closing high of $994.69 on Dec. 11. The bank holds a "neutral" rating and $1,060 price target.
This record was set a day after Costco announced fiscal first quarter earnings, which exceeded analysts’ expectations. Its first quarterly results following the implementation of higher membership fees.
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