Shares of the retail giant Costco Wholesale Corporation (NASDAQ:COST) fell over 4% in Thursday’s after-hours trading. The company, which operates membership warehouses and e-commerce websites, missed Wall Street’s second-quarter revenue expectations.
Costco Delivered Mixed Q2
Costco reported mixed second-quarter financials. It delivered total revenue of $58.44 billion, up 5.7% year-over-year. The company’s top line benefitted from a 5.6% increase in comparable sales and 8.2% growth in membership fees. Costco’s e-commerce sales increased 18.4% year-over-year. Nevertheless, revenues missed analysts’ average estimate of $59.1 billion.
The retailer’s earnings of $3.92 per share increased 18.8% year over year and exceeded analysts’ estimate of $3.62. Costco’s Q2 EPS was aided by a $94 million tax benefit resulting from the deductibility of special dividends.
Oppenheimer Analyst Foresaw the Drop
On March 5, Oppenheimer analyst Rupesh Parikh suggested buying COST stock in the event of any decline in its stock price.
Parikh raised Costco’s price target to $805 from $760 on March 5. Further, the analyst maintained a Buy rating. Parikh expected Costco’s Q2 earnings to stay under pressure because of the special dividend payment and the consequent loss of interest income. Notably, the company paid a special dividend of $15 per share on January 12.
What is the Outlook for Costco Stock?
Costco stock has gained over 19% year-to-date and is up about 66.5% in one year. Given the rally in its shares, analysts maintain a cautiously optimistic outlook.
The stock has received 21 Buy and eight Hold recommendations for a Moderate Buy consensus rating. However, analysts’ average price target of $734.68 implies 6.48% downside potential from current levels.
