Costco's April Sales Crush It: We're Boosting Our Price Target

* We are raising our Costco price target following its robust April sales report.

* Costco’s April sales rose 7.1% year over year with adjusted U.S. comp sales up 5.2%.

Costco’s April retail sales report is out, and it was another strong one for the company. Total sales rose 7.1% year over year to $19.8 billion. To help put this in perspective, the consensus revenue estimate for Costco’s current May quarter is $57.94 billion. Backing out the $23.48 billion revenue booked in March and April revenue of $19.8 billion says the company only has to deliver $14.7 billion in May, compared to $18.45 billion in May 2023. 

With consumers continuing to gravitate toward Costco as evidenced by the strength in its adjusted U.S. comp sales of 5.2% for April vs. 4.4% for the trailing 35 weeks, and 876 open warehouse locations exiting April vs. 853 at the end of May 2023, it’s safe to say that May quarter consensus revenue forecast will need to be adjusted higher. In response, we are lifting our COST price target to $830 from $800, and we expect to see others follow.

With just 9% potential upside to this new price target, we will keep our Two rating intact. We would consider revising that rating if COST shares pulled back to the 50-day moving average near $731 or if continued same-store sales strength led us to reconsider our price target yet again. 

At the time of publication, TheStreet Pro Portfolio was long COST.