Costco (COST) – Get report reported an increase in May sales on Thursday, prompting one analyst to write that the wholesale discount retailer was the “clear COVID winner.”
Shares of the Issaquah, Washington company rose 0.6% to $ 385.99 on the latest check. The shares are up 2.1% year-to-date, compared to 12.3% for the S&P 500.
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The company said net sales totaled $ 15.59 billion in May, up 24.2% from a year ago. Same-store sales in the US increased 21.9%, while e-commerce sales increased 12.1%.
Costco noted that the month of May this year had an additional shopping day compared to last year, due to the Memorial Day calendar change, helping sales by about 2% to 2 1/2 %, the company said.
“Reiterating our ongoing theme, we continue to believe that COST is a long-term central holding company and that it has so often proven that it can be a winner in different settings (during the financial crisis, during a consumer discretionary period, during a pandemic, etc.), “said JP Morgan analyst Christopher Horvers, who maintained his overweight rating and his $ 240 price target.
As 2021 progresses, the analyst added, “if the consumer is eating more at home or if they feel good enough to participate in the scavenger hunt atmosphere of their 140K [square foot] box (or use their attractive travel options), we see COST as a stock winner. “
Wells Fargo analyst Edward Kelly raised his price target from $ 400 to $ 415, maintaining an overweight rating on the shares, according to Fly.
The company “was a clear winner from COVID on fundamentals,” Kelly said, but added there is reason to believe it may also be a subtle way to play the reopening.
Comparable store sales have averaged just under 13% in the year after the pandemic started, so concerns about subsequent comparisons are not unwarranted, the analyst said.
But Kelly said he still sees underestimated trade-offs, namely the demand for dining out, the resumption of service businesses, the return of family gatherings and accelerated membership growth.
He said he continues to see an advantage in the name even after his execution from early March.
Jefferies analyst Stephanie Wissink, who has a buy rating on the stock and a price target of $ 445, raised her estimate of comparable sales for the fiscal fourth quarter to + 6% “based on the strength of May and assuming a more modest reduction for the rest of the quarter, on a continued boost, especially in food. “
Wissink added that he was monitoring California’s broader reopening on June 15, which he said is Costco’s largest state, accounting for about 30% of sales in the United States.
Barclays analyst Karen Short, who has an overweight rating and a price target of $ 450, said she believes 2022 “will be the year of the consumer hangover” and “we believe COST will benefit in this environment given the differences in prices between conventional and unconventional “. classmates.”
“CY22 could be the year that COST increases the membership fee based on historical cadence as COST surpasses the 5-year mark of its last membership fee increase in June 2017,” Short wrote in a note. research.
Last month, Costco beat analysts’ fiscal third-quarter earnings expectations and also reported same-store sales that were ahead of forecast.
In April, Costco reported stronger-than-expected March sales data.
The company reported lower-than-expected earnings for the second fiscal quarter due to the continuing effects of the COVID-19 pandemic.