Analyst Christopher Horvers from JP Morgan recently raised the price target for Costco Wholesale Corporation to $1,090, up from $945, while keeping an Overweight rating after the company's November sales results. The retail giant reported a 5.6% increase in net sales for the month of November, reaching $21.87 billion compared to $20.71 billion the previous year. Additionally, for the twelve-week first quarter ending on November 24, 2024, net sales rose to $60.99 billion, a 7.5% increase from $56.72 billion in the same period the year before. Overall, net sales for the first thirteen weeks totaled $66.52 billion, reflecting a 7.2% increase over the prior year.
E-commerce sales for Costco in November experienced a decline of approximately 15 percentage points, primarily attributed to the later timing of significant shopping events like Thanksgiving, Black Friday, and Cyber Monday compared to the previous year. This shift led to a slight decrease of around 1.5% in total and comparable sales for the month. Horvers emphasized Costco's exceptional value proposition, highlighted by 11% gross margins, a loyal customer base with a renewal rate of approximately 90%, and a 2%-3% annual global growth opportunity. The analyst noted that these characteristics are rare in the retail and consumer staples sectors and highlighted the potential for Costco to double its current store base.
Costco's outperformance in terms of market share gains and customer traffic trends was underscored by Horvers, particularly pointing out the company's 70% consumable product assortment. Looking ahead to December, the analyst anticipates core U.S. comparable sales to increase by 6.7%, with Canada and Other International markets also expected to see growth, resulting in a total company core comparable sales increase of 7.2%. For investors looking to gain exposure to Costco's stock, options include the Vanguard Consumer Staples ETF (VDC) and the Fidelity MSCI Consumer Staples Index ETF (FSTA). As of the latest check on Thursday, Costco shares were trading at $986.06, experiencing a 0.49% decrease.