Retail powerhouse Costco (COST) is set to release its second quarter Fiscal 2025 financials on February 6. COST stock has gained over 37% in the past year, primarily due to strong financial performance, an increase in membership fees, store and e-commerce expansion, and its resilient business model attracting cost-conscious consumers. Wall Street analysts expect the company to report earnings of $4.09 per share, representing a 14% increase year-over-year.
Meanwhile, revenues are expected to grow by 9% from the year-ago quarter to $62.97 billion, according to data from the TipRanks Forecast page.
Recent Event Ahead of Q2 Print
On February 4, Costco reported strong January sales, with net sales up 9.2% year-over-year to $19.51 billion. Meanwhile, the company’s comparable store sales, a key metric that excludes the impact of gasoline prices and foreign exchange, witnessed strong growth across all regions. Notably, company-wide comparable store sales increased by 9.8% in January.
Analysts’ Views on COST
Ahead of Costco’s Q2 results, Stifel raised Costco’s price target to $1,075 from $1,000, while maintaining a Buy rating. The firm noted that Costco’s January comparable sales rose 9.8% overall and 9.2% in the U.S., beating expectations. With the traffic rising 7%, Stifel believes Costco’s value proposition continues to attract customers. As a result, the firm raised its FY2025-2026 EPS estimates and sees Costco’s strong performance justifying a premium valuation.
Meanwhile, Edward Kelly reiterated a Hold rating on Costco, citing concerns over its steep valuation. The analyst contends that while Costco showed strong January sales, solid traffic growth, and gains in Fresh Foods and Non-Foods, its high valuation balances the risk and reward, limiting further growth potential.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 4.54% move in either direction.
Is Costco Stock a Buy or Sell?
Turning to Wall Street, Costco has a Moderate Buy consensus rating based on 17 Buys and eight Holds assigned in the last three months. At $1,088.75, the average COST price target implies 5% upside potential.
