New Costco Price Target as Tariff Impact Looms Ahead of Earnings

This week, Costco COST reported April comparable sales that were up 4.4%, including a 5.2% increase in the U.S., a 1.5% rise in Canada, and a 3.2% gain for other international markets.

E-commerce comp sales shot up 12.6% during the month. Stripping out the impact of foreign exchange and gas prices, comparable sales were up 6.7%, including an increase of 7.1% in the U.S.

As impressive as those figures are, they are even more so when we consider that the period had one less shopping day compared to last year. Management estimates that calendar effect negatively impacted total and comparable sales by approximately 1.5% to 2%.

Next week brings the April Retail Sales report, and we strongly suspect it will confirm that Costco continues to win consumer wallet share.

Exiting the month, Costco had 905 warehouse locations in operation, up from 876 at the end of April 2024. That continued footprint expansion, married with Costco’s 2024 membership price increase, bodes well for its higher margin membership fee revenue stream. We see that as a key differentiator compared to other retailers. Because it drives about 50% of Costco’s pre-tax income, it should also help insulate its bottom line from the impact of tariffs much more than other retailers.

Costco will report its quarterly results on May 29, and based on its March and April revenue reports and comp sales, we’re lifting our price target for this Two-rated stock to $1,150 from $1,100.

During the company’s earnings call, we will hear much more on the expected impact of tariffs and how Costco is working to minimize their impact on its business. Based on what we learn and what we infer for its May sales, we’ll adjust our price target as needed.

In terms of our panic point and pick up points for COST shares, we will share those levels for the Pro Portfolio early next week.

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At the time of publication, TheStreet Pro Portfolio was long COST.