Costco Wholesale's (COST) fiscal Q2 results should provide "yet another round of strong evidence" of the retailer's resilient business model, UBS Securities said in a note emailed Tuesday.
The firm expects Costco to post another strong quarter and raised its earnings estimate to $4.35 per diluted share from $4.29, above the consensus of $4.10 per share provided by UBS. The firm cited 8.8% net sales growth and 8.4% core comparable sales growth as indicators of Costco's sustained momentum.
UBS highlighted enhancements to Costco Logistics and its online shopping experience as factors contributing to sustainable eCommerce growth, further strengthening what it called a "best-in-class shopping experience."
"All of this means that it continues to grow its sales and profitability to record levels," UBS wrote.
Given the pace of return on invested capital, the firm said the premium on the company's stock price was "justified."
"At this point, we think [Costco] is a beacon in an otherwise uncertain consumer landscape. There's probably not a lot that can come from this print that will change the market's perception that [Costco] is a good place to be," UBS said.
UBS has a buy rating on Costco and raised its price target to $1,205 from $1,140.
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