We're Adjusting Our Costco Price Target After Impressive Numbers

Last night, Costco delivered its latest quarterly results, and if you read our note about the company’s November sales report, you should not have been surprised by the quarterly total revenue figure reported. As we pointed out in that Alert to you, while Costco reports monthly net sales figures, those reports do not include membership fee revenues. That brings us to the $67.3 billion in total revenue Costco reported for the quarter, up 8.3% compared to the year-ago quarter.

Breaking it down, net sales rose 8.2%, which, again, was not a surprise, but those figures confirm the company continues to win over consumers. While that figure is impressive compared to numbers being put up by other retailers, what makes that 8.2% figure an even greater standout to us is that it laps the 7.5% net sales increase posted in the year-ago quarter and 6.1% in the same quarter in 2023.

How is Costco able to do that?

It’s the combination of expanding its warehouse footprint (and yes, there is further room to go on that front), having the right mix of product available, and helping consumers get more for their spending dollars. Not new information, but a solid reminder as to why Costco is able to continue putting up the numbers that it does.

What Grew Faster than Costco’s Net Sales?

Operating income for the quarter climbed just over 12%, compared to the year-ago quarter, due to better merchandise margins, but really due to a 14.0% year-over-year gain in those high-margin membership fees. Driving that revenue was the continued gain in paid memberships and executive memberships, which rose 4 million and 3.3 million compared to the year-ago quarter. For those wondering, we’ve seen a steady increase in both over the last several quarters. And 12% operating income growth compared to 8.3% total revenue growth means margin expansion.

To be clear, those membership gains are eclipsing the growth in warehouse locations, which ended the November 2025 quarter at 923 compared to 897 exiting the year-ago quarter. This tells us Costco’s value proposition continues to woo consumers — as do the consistent membership renewal rates at 90% globally and more than 92% in the U.S.

What the cumulative data points tell us is that Costco continues to hum and consumers continue to respond.

Adjusting Our Price Target

That is giving us reason to maintain our One rating even as we take a more cautious stance on overall consumer spending and trim our COST target to $1,100 from $1,200. We may see others on Wall Street make similar adjustments, but because of Costco’s numbers discussed above, we doubt we will see any rating changes. Already this morning, there have been some positive price target adjustments from JPMorgan and Bernstein, and multiple Buy ratings reiterated at Baird, Goldman Sachs, BMO Capital, and others.

Our Costco Game Plan

We’ve been in situations like this with other Pro Portfolio holdings, and while frustrating, the lesson learned is to follow the data. With that in mind, we will remain owners of Costco, but if we were to see comp sales or membership figures flat line, that would give us a reason to reconsider owning the shares.

With management targeting 30 more warehouse locations opening in the coming few quarters and more after that, the odds of that happening are low. But we will follow the data and make decisions based on what it tells us. Costco will report its December sales on January 8.

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