Costco Wholesale Corporation (NASDAQ:COST) reported fourth-quarter results on September 24 that came in ahead of expectations, with net sales up 11.2% to $93.9 billion and earnings of $6.75 a share.
At least eight research firms lowered their price targets the following day. The shares rose 2.93% to close at $922.77.
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The Quarter Itself Went Almost Entirely Costco’s Way:
Comparable sales rose 9.4% across the company and 10.7% in the United States. Digitally enabled sales grew 19.5%, which remains the fastest-moving part of the business.
The sixteen-week quarter closed a fiscal year in which net sales reached $297.2 billion. One item deserves a caveat. Earnings included a non-recurring benefit of $0.15 a share from tariff refunds, which the company partly reinvested in member values. Strip that out and the quarter is still ahead of expectations, but by less than the headline suggests.
Nothing in the release pointed to a business losing momentum. Sales grew, the digital channel accelerated, and profit rose year over year.
Costco also finished the year operating 939 warehouses worldwide, having continued to open locations through the period.
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The Cuts Were About Membership Rather Than the Quarter:
Truist made the largest reduction, taking its target to $955 from $1,011 while keeping a Hold rating. Its analyst pointed to member growth continuing to slow.
Bernstein reached the same conclusion about membership. It then cut its target by a single dollar, to $1,143 from $1,144, and kept an Outperform rating. The firm called membership fee income the biggest question facing the stock over the next twelve months, with the American market relatively saturated and no Asian warehouse openings planned. JPMorgan cut to $1,015 from $1,100 and also stayed Overweight.
That pattern matters. Most of the firms trimming their numbers did not change their ratings, which makes this an argument about price rather than about the business.
The day was not one-directional either. HSBC upgraded the stock to Buy, and DA Davidson raised its target to $1,040. TD Cowen and BMO both reiterated positive ratings.
So the same set of results produced a downgrade in price expectations from eight firms and an upgrade in rating from another. That is unusual, and it happens when analysts agree about the present and disagree about the next twelve months.
Membership is the line under scrutiny because the valuation rests on it. Costco earned $20.76 a share across the fiscal year, so the stock trades near 44 times what the business actually produced.
Conclusion:
Costco beat on sales and on its digital channel, and the market rewarded it with a 2.93% gain. The average target across Wall Street still sits above $1,045. However, eight firms trimmed their numbers on a single day, and they did so over membership growth rather than anything in the quarter itself. A retailer trading near 44 times earnings is priced on that fee line compounding, not on one strong sixteen-week stretch. What makes the reaction awkward to read is how little conviction sat behind it. Bernstein cut by a single dollar and stayed bullish. HSBC upgraded on the same morning. The shares finished higher than they started.
Market Sentiment:
Costco Wholesale Corporation was held by 104 hedge funds with a combined stake value of about $11.6 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 107 hedge fund holders in the previous quarter, although the value of those positions rose from around $10.4 billion.
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This article is originally published at Insider Monkey.
