Analysts Remain Optimistic About Costco

Costco's latest quarterly earnings report paints a less than rosy picture for the warehouse club retailer.

While Costco has had a rough time this month, with an earnings release that didn’t live up to expectations and shares that dropped 5.7 percent, many analysts are saying this is the perfect time to buy stock in the national wholesale retailer.

According to Seeking Alpha, Cowen and Company recently backed its Outperform rating on the retailer, joining other Wall Street firms that have either upgraded Costco or backed a bullish rating since February. The list includes Wells Fargo, Credit Suisse, Citi, Oppenheimer, BMO Capital and Baird with its $200 price target.

“Our view is that edits to the multivendor mailer, a fundamentally low merchandise margin structure, margin improvement from Visa partnership, strong traffic in the U.S. and global unit growth prospects make this a good stock opportunity against a ~27x FY18E P/E and stock performance pullback of -7 percent since reporting weaker than anticipated 2Q17 EPS on March 2,” read Cowen and Company’s note.

Costco’s latest earnings report came in at $1.17 per share in the fiscal second quarter, which ended February 12, compared to the $1.36 per share expected by the Street. Revenue came in at $29.8 billion, slightly below the consensus forecast of $29.9 billion.

Shares of Costco traded at about 7 percent off their 52-week high last week.