Costco (COST) Stock Forecast & Price Target

Costco Wholesale's financial outlook remains positive, driven by a 14% increase in membership fee income, which reached $1.33 billion, surpassing expectations and reflecting strong member retention rates. The company experienced a modest increase in traffic and an expansion in retail gross margins, which improved 4 basis points to 11.32%, benefiting from key categories such as Fresh, Food & Sundries, and Non-Foods. Additionally, new warehouse openings have become more profitable, with an estimated revenue generation of $192 million per club, up from $150 million two years prior, indicating a robust growth trajectory for the business.

Costco Wholesale faces a negative outlook due to declining membership renewal rates, with the global rate at 89.7% and the US and Canada rate at 92.2%, both representing slight decreases from previous highs. The company is also experiencing a slowdown in the growth of paid memberships, which may lead to a potential quarterly decline, exacerbated by a deceleration in year-over-year comparable traffic. Additionally, as Costco plans to open just 28 new clubs for FY26, a reduction from initial estimates, concerns regarding competition and weakening key metrics suggest a challenging environment moving forward.