What Analysts Think of Costco Stock Ahead of Earnings

Costco is expected to release fiscal third-quarter earnings after market close Thursday, with analysts anticipating an 8% increase in sales to $63.19 billion and a 14% rise in EPS to $4.31. While analysts generally rate the stock as a 'buy,' the average price target suggests only a modest 5% upside from its current 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 bolster high-margin membership revenue and provide flexibility in managing potential tariff impacts.

Analysis

Costco Wholesale is anticipated to report robust fiscal third-quarter 2025 earnings, with analysts forecasting an 8% year-over-year sales increase to $63.19 billion and a 14% rise in earnings per share to $4.31. Concurrently, paying memberships are expected to grow to 79.6 million from 78.4 million in the prior quarter. While ten analysts tracked by Visible Alpha advocate a "buy" rating against six recommending a "hold," the average price target of $1,058.40 implies a limited upside of approximately 5% from its recent closing price. UBS analysts project that Costco is well-equipped to manage macroeconomic uncertainties, including potential tariff impacts, attributing this resilience to its agile product strategy and the financial cushion provided by its high-margin membership revenue. The recent membership fee increase, effective September, is expected to start positively impacting profitability in the second half of fiscal 2025 and continue into fiscal 2026, thereby strengthening Costco's ability to absorb cost pressures without significant price hikes. The market generally holds a positive view of Costco, and its capacity to navigate upcoming headwinds is likely to become more evident as the effects of tariffs unfold in the coming months, even as the stock has already appreciated by about 10% in 2025.

Key Decisions for Investors

• Investors should closely examine Costco's upcoming earnings report for confirmation of the projected 8% sales growth and 14% EPS increase, alongside trends in its 79.6 million paying member base.
• Consider the current valuation in light of the average analyst price target suggesting a modest 5% upside, despite predominantly 'buy' ratings and strong underlying financial expectations.
• Pay particular attention to management's discussion on the tangible benefits from the recent membership fee increase and their specific strategies for mitigating potential tariff-related disruptions, which are seen as key strengths.
• Evaluate whether the company's strong operational outlook and resilience to tariffs, highlighted by UBS, are already substantially reflected in the stock's approximate 10% year-to-date appreciation.