Costco Reports May Sales Jump; Top Analyst Says Stock ‘Best Positioned’ For Current Crisis

Costco Wholesale (COST) has reported impressive sales for the retail month of May. Comparable sales rose 9.7% (excluding the impacts from change in gasoline prices and foreign exchange), easily beating the consensus estimate of 4.5%.

Specifically, the company reported $12.55 billion in net sales for the four weeks ended May 31, 2020 versus $11.67 billion last year.

For the thirty-nine weeks ended May 31, 2020, the company reported net sales of $120.19 billion, an increase of 7.7% from the $111.56 billion made during the similar period last year.

Notably, comparable e-commerce sales shot up by 108.1% over the four weeks, and 38.1% over the last 38 weeks. Meanwhile, the US recorded a 9.2% sales jump for May, with Canada at 4.9% and ‘Other International’ at 17.9%.

RBC Capital analyst Scot Ciccarelli was pleased by the results, writing: “In addition to what we view as relatively solid comp results, the company’s e-commerce efforts continue to bear fruit, as sales in the channel more than doubled during May… likely due to more online grocery shopping amid Covid-19 fears.”

He believes that Costco continues to be one of the best positioned among his coverage to overcome the current crisis due to their heavy food/consumable offerings and ‘investment in value.’

“With what we view as a huge competitive advantage (buying better and working on a lower mark-up than almost any other company) and attractive defensive characteristics in a weakening economic environment, we remain buyers of COST shares” the analyst concludes. Ciccarelli’s COST buy rating comes with a $348 price target (13% upside potential).

Overall, analysts have a cautiously optimistic take on Costco with a Moderate Buy consensus made up of 13 recent buy ratings and 7 holds. The average analyst price target stands at $332 (8% upside potential). Shares are currently trading up 4% year-to-date. (See COST stock analysis on TipRanks).

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