Latest news with #ZhihanMa
CNBC
3 days ago
- Business
- CNBC
Analysts stay upbeat on Costco after solid quarter, but say it's richly valued
Costco's solid third-quarter results on Thursday left Wall Street analysts confident that the membership club wholesaler can retain its dominance. The firm, whose sales in its current fiscal year are estimated to reach $275 billion, surpassed analyst estimates on the top and bottom line in the quarter that ended May 11. Analysts pointed to strong foot traffic, customer loyalty and said Costco is well-positioned to handle tariff headwinds as U.S. trade policy continues to evolve. Shares have advanced 14% so far in 2025, outpacing the S & P 500, which is little changed. But after Costco stock more than doubled in the two years from the start of 2023 to the end of 2024, consensus analyst forecasts for the next 12 months imply just 3.4% upside. Bernstein analysts, for example, caution that future gains could be slim because the stock is "priced for perfection." COST YTD mountain Costco stock in 2025. Shares rose 3.1% Friday in reaction to the latest quarter's results released post-market Thursday. Here are the main takeaways from analysts on Wall Street after Costco's fiscal third-quarter print. Bernstein, outperform rating, $1,153 per share price target Analyst Zhihan Ma's forecast implies 11% upside from Friday's close of $1040.18. "Overall, we are encouraged by COST's strong traction with consumers, evidenced by its meaningfully above-peer comp sales growth. Further, we expect COST to continue to expand its store footprint in the U.S. and globally at a measured pace," Ma said. "At the current rate of expansion, we see a long growth runway for COST for decades from here." Morgan Stanley, overweight, $1,225 Analyst Simeon Gutman's price target, which he raised from $1,150, implies about 18% upside. "It is rare to find a business with COST's solid comp/membership growth, while relative e-commerce insulation differentiates its value proposition from other retailers," Gutman said. "We are Overweight even as the stock trades at an elevated valuation given COST's scarcity value, safety, and scale." UBS, buy, $1,205 Analyst Michael Lasser said the third quarter proved that Costco can successfully mitigate potential challenges posed by tariffs, and lauded the company's "superior consistency and execution." "This quarter was a good illustration of why we think COST is well set up to outperform. Once again, COST generated consistent and robust comp performance month in, month out," Lasser said. "It managed its profitability well amid plenty of uncertainties, including [last in, first out] charges and continued labor investments. It also provided compelling evidence why it should be able to mitigate tariffs while maintaining its moat around value." Deutsche Bank, buy, $1,106 Analyst Krisztina Katai's forecast calls for about 6% upside. "All in, we anticipate COST should continue to extend its top-line strength and share gains, and we see meaningful opportunity from its retail media business, the evolution of its business model and supply chain efficiencies to drive further margin expansion," Katai said. Wells Fargo, equal weight, $1,000 Wells Fargo analyst Edward Kelly remains optimistic on Costco over the long-term, but noted some concern due to its valuation. "One of the highest quality companies in consumer with attractive defensive positioning, but risk/reward isn't appealing to us," Kelly said. "A clear share gainer and [membership fee income] a tailwind, but not immune to the weak pricing backdrop, visibility on sustained margin upside is low and the stock looks expensive given the long-term algo."
Yahoo
06-04-2025
- Business
- Yahoo
Why Target Stock Slipped by Nearly 8% This Week
The stock market's steep fall this week claimed a lot of victims, among which were some onetime heavy investor favorites. One of these was veteran retailer Target (NYSE: TGT) which, according to data compiled by S&P Global Market Intelligence, lost nearly 8% of its value across the period. Investors and analysts alike were concerned about the company's exposure to a big trading partner. That trading partner is China, a nation that's front and center on the Trump administration's long list of tariffs that went into effect during the week. Several analysts cautioned that companies with significant China business could end up really taking it on the chin, mirroring investor fears. One pundit who put this concern into words was Bernstein's Zhihan Ma. On Friday, she published a broad take on the impact of the tariffs on the retail sector. In the analysis, she flagged Target and discount retailer Dollar Tree as being the two most exposed within her company's coverage of the sector. According to her calculations, both companies have roughly 50% direct and indirect exposure to Chinese manufacturing. With the high (34%) tariff imposed by the administration, costs for the two are set to rise significantly. Since this was a comparative analysis, Ma also identified the retailers she felt were relatively insulated from the new levies. In her view, these are Walmart, Costco, and Dollar General. To her, Walmart and Costco not only have relatively limited exposure to tariff-slammed exporters but also the bargaining power to negotiate lower prices from suppliers. Before you buy stock in Target, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Target wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $494,557!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $623,941!* Now, it's worth noting Stock Advisor's total average return is 781% — a market-crushing outperformance compared to 156% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 4, 2025 Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy. Why Target Stock Slipped by Nearly 8% This Week was originally published by The Motley Fool
