What Analysts Think of Costco Stock Ahead of Earnings

Costco is expected to report fiscal Q3 earnings after market close Thursday, with analysts anticipating an 8% increase in total revenue to $63.19 billion and a 13% rise in EPS to $4.27. While analysts generally rate the stock as a 'buy,' the average price target suggests a modest 4% upside from Tuesday's closing price. UBS analysts believe Costco is well-positioned to handle tariff-related uncertainties due to its scale and the benefits from its recent membership fee increase, which should positively impact profits in the second half of fiscal 2025 and into fiscal 2026.

Analysis

Costco Wholesale is scheduled to report its fiscal third-quarter 2025 earnings after Thursday's market close, with analysts anticipating robust growth: an 8% year-over-year increase in total revenue to $63.19 billion and a 13% rise in earnings per share to $4.27. Membership figures are also expected to climb, with paying members projected to reach 79.6 million, up from 78.4 million in the previous quarter. Despite a generally bullish sentiment, with ten out of sixteen analysts tracked by Visible Alpha rating the stock a "buy," the average price target of $1,058.40 suggests a limited upside of approximately 4% from Tuesday's closing price, which is already near its record high of just under $1,077. UBS analysts express confidence in Costco's ability to navigate macroeconomic uncertainties, including potential tariff impacts, due to its operational agility in product sourcing and the financial leverage from its high-margin membership fee structure. The recent membership fee increase, effective from the start of fiscal 2025, is expected to begin positively influencing profits in the second half of the fiscal year and into fiscal 2026, providing a buffer against cost pressures. Year-to-date, Costco shares have gained about 11%, reflecting underlying strength despite market volatility, and UBS anticipates the company's resilience to become more evident as tariff effects become clearer in the coming months.

Key Decisions for Investors

• Investors should closely monitor the Q3 earnings release for confirmation of the expected 8% revenue and 13% EPS growth, alongside commentary on the initial impact of the recent membership fee increase and strategies to manage tariff-related challenges.
• Considering the current share price is near its record high and analyst price targets indicate only modest near-term appreciation potential (around 4%), investors might weigh the strong fundamental outlook against the current valuation.
• Attention should be paid to management's forward guidance, particularly concerning the sustainability of membership growth and the company's ability to absorb or pass on potential tariff costs without eroding margins or sales volume.