Costco (COST) Stock Forecast & Price Target

Costco Wholesale's financial outlook remains positive due to a notable expansion in retail gross margin, which increased by 13 basis points to 11.1% in 4QF25, driven by strong performance across key product categories. Additionally, membership fee income saw a robust increase of 14.0% to $1.72 billion, reflecting the company's successful member growth strategy, which culminated in an increase in paying members to 81 million. Moreover, Costco's earnings before interest and taxes (EBIT) rose by 9.8% to $3.3 billion, indicating resilient profitability amidst a challenging macroeconomic environment.

Costco Wholesale has exhibited slightly worse-than-expected performance metrics, with a reported EBIT of $3.34 billion and an EBIT margin of 3.88%, influenced by thinner margins that result in a higher sensitivity to fluctuations in sales. The company’s worldwide membership renewal rate has declined by 40 basis points to 89.8%, signaling potential challenges in maintaining customer loyalty, particularly among online signups. Additionally, various macroeconomic risks, including deterioration of consumer confidence and rising costs that may not be easily passed onto customers, could hinder Costco's growth and profitability in the coming periods.