Costco price target lowered to $1,058 from $1,132 at Bernstein

Bernstein lowered the firm’s price target on Costco to $1,058 from $1,132 and keeps an Outperform rating on the shares. The firm expects renewed inflationary pressure on the back of potential tariffs and wage inflation in 2025, which is a net positive for mass/club retailers, a net neutral for dollar retailers as consumers’ need to trade down is offset by higher labor costs, and a net negative for home improvement retailers as this could dampen the rate cut outlook. Historical evidence suggests that mass/club retailers generally see accelerated comp sales growth but experience gross margin pressure to a varying degree in inflationary periods. Within Bernstein’s coverage, Walmart (WMT) and Costco (COST) are well positioned given their strong value proposition, while Target (TGT) lags.