Costco (COST) Stock Forecast & Price Target

Costco Wholesale's stock outlook remains positive due to its successful membership-based model, reflecting a significant 90.5% worldwide membership renewal rate and a robust 93% renewal rate in the US and Canada, bolstered by a high penetration of executive members. The company reported mid-single-digit comp sales growth, supported by strong consumer traffic increases of 5.0% in February, which highlights its continued ability to attract shoppers seeking value, along with a stable average ticket rise of 1.4%. Furthermore, the retail gross margin demonstrates resilience with an increase to 10.9% in 2QF25, alongside a notable 7.4% growth in membership fee income to $1.2 billion, showcasing the effectiveness of Costco’s cost structure and operational strategy in driving profitability.

Costco Wholesale is facing multiple headwinds that contribute to a negative financial outlook, including a projected core merchandise comp decrease of 230 basis points attributable to gas price declines and foreign exchange pressures, coupled with an estimated impact of 240 basis points on total company performance from foreign exchange fluctuations. Additionally, the firm has revised its fiscal year 2025 earnings per share estimate downward to $18.12, reflecting potential challenges in consumer spending, increased competition from e-commerce retailers like Amazon, and renewed concerns regarding the macroeconomic environment. Further concerns arise from lower renewal rates and rising commodity costs, which jeopardize Costco's historically strong operating margins and consumer confidence.