Costco's Q3 2024 Earnings Preview: Analyst Expects Results in Line with Estimates

Oppenheimer's Rupesh Parikh raised their price target on Costco (NASDAQ: COST) by 5.6% from $805 to $850 on May 22, 2024. The analyst maintained their Buy rating on the stock.

Parikh's price target increase reflects their positive outlook on Costco's upcoming Q3 2024 earnings report. According to Parikh, Oppenheimer expects the results to be largely in line with their unchanged Q3 EPS estimate of $3.60. However, this estimate falls short of the consensus estimate of $3.71.

Parikh also highlighted that Costco shares have historically traded mixed after quarterly reports. Despite this, Oppenheimer remains confident in the company's superior value proposition and leading merchandising capabilities, which they believe will continue to drive market share growth.

Costco recently reported its Q2 2024 earnings, which surpassed expectations. The company reported an EPS of $3.71, beating the Zacks Consensus Estimate of $3.60 by 12.4%. Additionally, Costco's revenue for Q2 2024 came in at $57.33 billion, exceeding Q2 2023's revenue of $54.24 billion by 5.7%. While the revenue fell short of the Zacks Consensus Estimate of $59.2 billion, the overall performance was positive.

In terms of the company's financial guidance, Costco's management did not provide any specific figures during their press release or earnings call. CFO Richard Galanti did mention that the company aims to lower prices and has experienced some shipping and supply chain delays. However, these delays have been mostly planned for, with only minor disruptions.

Analysts' consensus forecast for Costco's upcoming year projects an EPS of $16.01. If these predictions hold true, it would represent a 4.5% increase in yearly EPS compared to the previous year.

Costco's stock performance has been impressive, with a year-over-year increase of 63%. During the same period, the stock has outperformed the S&P 500, which has seen a 25.6% increase.

It's worth noting that 80% of top-rated analysts currently rate COST as a Strong Buy or Buy, while the remaining 20% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

Rupesh Parikh, the Oppenheimer analyst who provided the updated rating and price target, is ranked in the top 10% of Wall Street analysts by WallStreetZen. With an average return of 7.7% and a win rate of 58.8%, Parikh specializes in the Consumer Defensive and Financial Services sectors, among others.

Costco Wholesale Corporation operates membership warehouses across various countries, offering a wide range of branded and private-label products. The company's diverse merchandise categories include groceries, electronics, office supplies, furniture, and more. In addition to its physical stores, Costco also operates e-commerce websites in multiple countries.

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