Costco upgraded to Buy as Northcoast lauds value proposition
Eric Thayer

Costco Wholesale Corporation (NASDAQ:COST) was raised to a Buy rating at Northcoast Securities as the firm sees upside as consumers continue to seek bargains.

Northcoastâs analysts voiced the belief that the stock is set up to outperform in the second half of the fiscal year. Amid persistent inflation and an increased focus of consumers on discretionary spending, the deals offered by Costco are likely to attract more shoppers.

âCostco has been here before. At these times, its strong value proposition in consumables â from food to pharmacy and HBC to household supplies to gasoline â not only allows it to retain its many loyal members, but attract new ones. In other words, 2023 will set this retailer up for another stage of overall market share gains,â the analysis explained. âFurther, an impeccable balance sheet gives US confidence that a special dividend (of at least $10 per share) as well as more, and perhaps aggressive, share repurchases will occur during the next 12-24 months.â

The team added that a membership fee is likely on the way, adding upside to EPS estimates. Alongside the upgrade from Neutral to Buy, the analysts assigned the stock a $560 price target. 
Costco (COST) stock rose modestly before the bell on Tuesday.
Read more on the prospects for a membership fee hike.