Costco Posts Strong Third-Quarter Results
Costco Wholesale Corporation delivered a robust performance in its fiscal third quarter ending May 11, exceeding analyst expectations on both revenue and earnings. The company is projected to generate approximately $275 billion in sales for the current fiscal year, reflecting its continued dominance in the wholesale membership club sector.
Positive Analyst Outlook Driven by Customer Loyalty and Growth Potential
Wall Street analysts remain confident about Costco's ability to maintain its market leadership, citing strong foot traffic, high customer loyalty, and the company's strategic positioning to navigate evolving U.S. trade policies and tariff challenges.
Costco shares have surged by 14% year-to-date in 2025, significantly outperforming the S&P 500, which has seen little movement in comparison. However, following a more than doubling of the stock price from early 2023 through 2024, analysts now anticipate modest upside potential over the next 12 months.
Key Analyst Perspectives
- Bernstein: Analyst Zhihan Ma assigns an outperform rating with a price target of $1,153, indicating an 11% upside from the recent closing price. Ma highlights Costco's superior comparable sales growth compared to industry peers and notes ongoing steady expansion plans both domestically and internationally.
- Morgan Stanley: Simeon Gutman upgraded the price target to $1,225, suggesting approximately 18% potential gain. Gutman emphasizes Costco's strong membership and comparable sales growth combined with resilience against e-commerce competition, describing the stock as having a scarcity value due to its scale and safety.
- UBS: Analyst Michael Lasser maintains a buy rating with a $1,205 price target. He praises Costco's consistent monthly comparable sales performance and ability to manage profitability despite tariff-related expenses and labor costs. Lasser also notes the company's ability to protect its value proposition in challenging conditions.
- Deutsche Bank: Krisztina Katai projects a price target of $1,106, representing a 6% upside. She anticipates sustained top-line growth, further market share gains, and margin expansion driven by retail media initiatives and supply chain efficiencies.
- Wells Fargo: Edward Kelly adopts an equal weight rating with a $1,000 price target. While optimistic about Costco’s long-term prospects and membership fee revenue, he cautions that the stock’s valuation appears stretched amid uncertain margin expansion prospects and a challenging pricing environment.
Stock Performance and Market Position
Following the earnings release, Costco's stock rose 3.1% in after-hours trading. Despite recent gains, the broader consensus suggests limited upside, given the stock is currently trading near peak valuations.
Overall, the company’s solid fundamentals and strategic growth initiatives underpin analysts’ confidence, though some express caution regarding the premium price investors are currently paying.
