Bernstein is bullish on Costco due to its overlooked focus on international growth. Analyst Zhihan Ma initiated coverage with an outperform rating on the Washington-based company. Ma set a $1,016 price target, which implies shares can add 14.6% over Monday’s close. “Despite its expensive valuation, we believe its international growth potential is underappreciated, which can support consistent earnings growth for decades to come,” Ma told clients in a Monday note, in which she also called Costco the “highest quality company in our coverage.” Costco trades at nearly 50 times forward earnings, according to FactSet. That’s well above the S & P 500’s 24 multiple. That said, the analyst noted the company should see at least half a century on its growth runway, powered in the medium- to long-term by opportunities outside the U.S. Discounted cash flow through 2080 shows an upside of approximately 20%, Ma said, which highlights the value of Costco’s earnings power. As the consumer gets increasingly choosy , Ma said Costco is also a preferable play because of its focus on value. Ma’s call comes amid a strong year for shares, with the stock up more than 34% in 2024. Like her, the majority of analysts polled by LSEG have buy ratings on Costco.
