After a notable stock price increase in 2024, Costco (COST, Financial) released a mixed fourth-quarter earnings report, but analysts remain optimistic about its future. Despite the mixed results, multiple Wall Street institutions have raised their price targets for Costco. Barclays increased its target to $850, Morgan Stanley maintained its overweight rating with a target of $950, and JPMorgan raised its target from $925 to $945.
JPMorgan believes the December 2025 price target is based on a price-to-earnings (P/E) ratio of about 50 times their fiscal year 2026 earnings per share (EPS) forecast. This P/E ratio is slightly discounted relative to the current yearly valuation but higher than the historical average. This assessment reflects Costco’s reevaluated growth assets and its continued leadership in stock price gains and customer traffic trends within the retail industry.
Although the average price target from sell-side firms for Costco is $907.30, indicating caution about further short-term gains, analysts on Seeking Alpha have delved into the impact of the expected fiscal 2025 membership fee increase and stock valuation. Seeking Alpha’s quant rating for Costco is hold, with valuation being the main detractor from the overall score.
Costco’s fourth-quarter profit exceeded market expectations, indicating that consumer spending remains strong despite ongoing cost pressures. The earnings report shows that for the fourth quarter of fiscal 2024, which ended on September 1, total revenue was $79.697 billion, up 1% year-over-year but below analysts' average expectation of $79.96 billion. Net sales were $78.185 billion, up 1% year-over-year, and membership fees stayed roughly flat at $1.512 billion.
During Costco’s earnings call, management highlighted strong momentum in its fresh foods business, particularly in the meat department, where a discount strategy led to increased sales. Additionally, the introduction of more international foods has been well received by members.
As of Friday, Costco’s stock price fell 2.1% in early trading to $880.03. Despite this fluctuation, analysts remain optimistic about Costco’s long-term growth potential, particularly regarding membership fee increases and leading customer traffic trends in the retail sector.
