Costco Stock Rises as Analysts Boost Price Targets After Earnings

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beat Wall Road estimates for fiscal first-quarter income whereas mitigating supply-chain points and value will increase. The corporate cautioned, nonetheless, on toy shortages for Christmas.

Whole income, together with membership charges and internet gross sales, was $50.36 billion and earnings had been $2.97 a share. Analysts had been in search of income of $50.15 billion and earnings of $2.67 a share. A yr earlier, Costco reported income of $43.2 billion.

“General, we really feel we’ve dealt fairly nicely with the supply-chain challenges,” stated Chief Monetary Officer Richard Galanti on a convention name after the earnings had been launched Thursday night.

About 79% of import containers arriving at Pacific Coast ports are late by a median of 51 days, Galanti stated.

“In some cases, delayed stock merely extends the season,” Galanti defined. Toys, garden, backyard and patio gadgets had been some examples of merchandise that could be delayed previous the vacation season.

“Some stock, in actual fact, received’t make it earlier than Christmas, however we’ve mitigated that as greatest as attainable and really feel fairly good about it, ” Galanti stated.

The availability-chain and inflation points outlined by Costco within the first quarter are just like what the corporate famous within the earlier quarter. Different pressures embody greater labor prices, truck and driver challenges, container challenges, and shortages of uncooked supplies and substances and packaging provides.

Costco estimated that general year-over-year value inflation about 4.5% to five% within the first quarter.

“[We] really feel fairly good about staying in inventory and persevering with to work to mitigate price and value will increase as greatest we are able to,” Galanti stated.

Adjusted identical retailer gross sales, excluding gasoline and overseas trade, for the quarter rose 9.8%. E-commerce gross sales grew 13.3%.

Analysts boosted their value targets on the inventory.

BMO Capital analyst Kelly Bania lifted her value goal on Costco to $560 and reiterated an Outperform score. Morgan Stanley analyst Simeon Gutman boosted the worth goal to $560 from $510 with an Chubby score. Citi analyst Paul Lejeuz raised his value goal to $550 from $540 and maintained a Impartial score on the shares.

Costco is a prime decide at BMO. “We proceed to consider that COST stays nicely positioned heading into 2022,” Bania stated, citing potential will increase to membership charges in late 2022, extra publicity to higher-end shoppers, and increasing omni-channel options.

Stifel analyst Mark Astrachan believes Costco will announce a membership price improve of roughly 8% someday over the following 12 months primarily based on prior price will increase since 2006. Astrachan lifted his Costco value goal to $555 from $550 and maintained a Purchase score.

The inventory rose 3.7% to $543.67 on Friday.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com