Costco Wholesale’s (COST) upcoming fiscal Q3 financial results are expected to emphasize the strength of its warehouse club business model, UBS Securities said in a note.
The firm noted that Costco has consistently increased foot traffic by mid-single digits regardless of the macroeconomic backdrop.
“With such strong and consistent growth in footsteps, [Costco] offers exactly what the market is looking for right now, given that retail investors have very little appetite to be exposed to market share losers and are increasingly favoring market share winners,” UBS said in its note Monday.
UBS said new member growth, increasing traffic and new store openings likely helped the company grow its net sales by 8%, while earnings per share are estimated at $3.75, above the $3.71 consensus, for fiscal Q3, the firm added. Costco is scheduled to release fiscal Q3 results Thursday.
“We believe [Costco] can continue to appeal to a cash strapped consumer, and has a potential catalyst in place with a membership fee hike likely this year,” the firm said.
UBS lifted the price target to $940 from $825 and maintained the buy rating on Costco.