On May 30, Morgan Stanley analyst Simeon Gutman reiterated a Buy rating on Costco Wholesale Corporation (NASDAQ:COST) and set a price target of $1,225.00. The analyst based the rating update on COST’s strong growth potential and performance following the release of its fiscal Q3 2025 and YTD results on May 29.
A customer in a warehouse aisles, browsing the wide range of branded and private-label products.
Costco Wholesale Corporation (NASDAQ:COST) reported an 8% growth in its net sales for the quarter, reaching $61.96 billion compared to $57.39 billion last year. The analyst highlighted the company’s strong member growth and comparable sales momentum. Its membership fee income reached $1.24 billion, reflecting a growth of $117 million or 10.4% year-over-year.
The company also achieved better-than-expected gross margins, increasing by 41 basis points year-over-year to 11.25%, compared to 10.84% last year. The analyst attributed this growth to efficiency improvements, especially in the fresh department.
Another reason supporting the Buy rating is Costco Wholesale Corporation’s (NASDAQ:COST) ability to expand its market share against competitors and leverage its scale to counteract inflationary pressures. The analyst reasoned that its business model focuses on consumable categories, which offers a defensive edge due to limited tariff risks.
Gutman also stated that Costco Wholesale Corporation (NASDAQ:COST) is continuing eCommerce expansion and productivity improvements, initiatives that he anticipates will continue driving margin gains and support an optimistic long-term growth outlook for the stock.
Costco Wholesale Corporation (NASDAQ:COST) operates membership-only big box warehouse club stores and is one of the most popular department stores in the US. It offers its customers a wide range of offerings, including food, beverages, groceries, and more.
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Disclosure: None.
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