We're Upping Our Price Target for This Position — And Watching These Support Levels
Here's why we're making this move today.
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Coming off today’s October Retail Sales report, which we discussed in today’s Daily Rundown, we are boosting our price target on Costco COST to $975 from $950.
Why are we making this move?
After sizing up Costco’s September and October adjusted U.S. comp sales, it is evident the company continues to win consumer wallet share. In September, Costco’s U.S. adjusted retail sales comp was 9.3% but even after adjusting for the additional days in the reporting period it was still head and shoulders above the 1.7% year-over-year increase in pure retail sales during September. We saw the same outperformance this morning with the October data that showed pure retail sales in the October Retail Sales report rose 2.6% year over year, while Costco’s adjusted U.S. comp sales for the month climbed 5.8%.
Today, we are seeing the market re-adjust its thinking following Fed Chair Powell’s comments yesterday (see our discussion of that in today’s Daily Rundown), and we would not be surprised to see others raise their Costco targets in the coming days.
Given our more prudent approach, something you saw this morning when we nudged up our price target on Mastercard MA, and given where COST shares are trading today, we will stick with our Two rating. We will be watching key support levels near $897 and $875. Should we see COST hit the lower of those two, that would be an area worth contemplating adding additional shares.
At the time of publication, TheStreet Pro Portfolio was long COST.
