Costco (COST) Stock Forecast & Price Target

Costco Wholesale demonstrates a positive financial outlook due to a consistent increase in traffic, which rose by 5.0% in February 2025, complemented by a 1.4% increase in average ticket size, reflecting strong consumer demand for value-oriented products. The company's gross margin also showed improvement, expanding by 5 basis points to 10.9% in the second quarter of fiscal 2025, supported by efficient cost management and a high membership renewal rate of 90.5%. Additionally, membership fee income increased by 7.4% to $1.2 billion, bolstered by healthy renewal rates and strong performance in non-food categories, suggesting a robust business model positioned for continued growth.

Costco Wholesale faces significant headwinds impacting its financial outlook, primarily due to a net gas and foreign exchange (FX) impact projected at approximately 230 basis points, which could hinder comparable sales growth. The firm has revised its earnings per share (EPS) estimate for FY25 down to $18.12, a decrease from the previous estimate of $18.20, while the anticipated operating margin is also adjusted to 3.8%, reflecting a modest expansion that remains below prior expectations. Additionally, overarching risks, including volatility in commodity costs, increased interest rates, and weaker consumer confidence, further compound the pressures on Costco’s financial performance.