$603 price target and buy rating

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  • Shares of Costco Wholesale (NASDAQ: COST) received a price target of $603 from Truist. These are the details.

Shares of Costco Wholesale (NASDAQ: COST) received a price target of $603 from Truist. And Truist Securities analyst Scot Ciccarelli reiterated a buy rating on the stock.

Ciccarelli noted that the sharp rise in gasoline prices should generate:

1.) Higher Total Sales

2.) Modestly higher gross profits, but

3.) Lower gross margin percentages.

More gas trips to Costco should increase warehouse visits, which will increase sales and memberships.

“We believe the sharp increase in gasoline prices will lead to higher sales and slightly higher GP$, but a lower GM% – We expect the company’s “gasoline sales/blends” to increase significantly quite significant in the short/medium term, due to both higher gas prices (ASP) and increased volume/gallons as customers seek Costco’s lowest prices,” Ciccarelli wrote in a note. research.” We expect this change to have a positive impact on overall revenue and slightly increase GP$, but pressure on GM% since gasoline is one of the lowest GM products the company sells ( we believe ~MSD GM% versus ~11% commodity margins at the corporate level). Additionally, GM gasoline is likely to fall below historical levels given the company’s LIFO accounting and rapid inventory turnover model (thereby compressing earnings/gallon). However, even with lower GMs, we expect a slight increase in GP$ (which is what companies pay their bills with). »

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.

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