RBC Raises Costco PT to $190 on Q4 EPS Beat

Costco Wholesale (COST) has had its price target raised by analysts at RBC to $190 from $184 on better-than-expected Q4 results. The firm maintained its outperform rating on the stock. Shares of Costco are down 3% in pre-market trading.

In a note to clients, RBC said Costco’s sales and traffic remain “solid and consistent,” and cited traffic growth of “a very healthy” 3.9% (+4.4% in the U.S.), for two-year stacked traffic growth of 6.4% vs. 6.0% in Q3 and
5.0% in Q2.

“While some concerns remain around slower growth in sign-ups and declines in renewal rates,” said RBC, “we believe these issues are transitory in nature.”

The firm raised its 2018 EPS estimate to $6.40 from $6.37, and its 2019 estimate to $7 from $6.97. It also set a 2020 EPS estimate of $7.63.

RBC also said that despite investor fears over the risk of e-commerce disintermediation “Costco continues to have some of the best traffic growth in retail and is gaining traction with its own e-commerce initiatives.”