Costco (COST) Stock Forecast & Price Target

Costco Wholesale exhibits a strong trajectory with a 5.0% increase in total traffic for February 2025, alongside a 1.4% rise in the average transaction amount, driven by consumer demand for value and robust performance in non-food categories. The company's retail gross margin expanded to 10.9% in 2QF25, complemented by an impressive membership renewal rate of 90.5%, primarily fueled by automatic renewals and a high executive member penetration. Additionally, membership fee income rose 7.4% to $1.2 billion, with expectations for continued growth due to strong signup trends and renewal rates, further underpinning Costco's financial stability and growth potential.

The financial outlook for Costco Wholesale's stock presents several challenges, primarily due to a projected net headwind from gas and foreign exchange (FX) factors, estimated at approximately 230 basis points, which negatively impacts core merchandise comp projections. Despite a steady operating margin forecast of 3.8%, an EPS estimate for FY25 has been lowered to $18.12 from $18.20, reflecting concerns over volatile commodity costs and shifting consumer dynamics. Additionally, macroeconomic risks such as rising interest rates, weaker consumer confidence, and unemployment trends further complicate the company's growth potential and profitability outlook.