Costco Wholesale (COST) Intl Growth Poised To Reaccelerate - Morgan Stanley

Morgan Stanley analyst Simeon Gutman reiterated his $230.00 price target on Costco Wholesale (NASDAQ: COST) while maintaining a Equalweight rating but noted that International growth is poised to accelerate as the company opens its first mainland China warehouse.

The analyst stated "We think China could usher in another phase of unit growth. COST has been successful in Japan, Taiwan, and South Korea, and we think this track record can be replicated in China over time". "International sq ft. growth has decelerated from ~6.5% in 2016 to roughly ~3% in 2019. We see opportunities for growth in Japan, Taiwan, Canada, Australia, and Spain. With growth set to ramp in these and other regions, including one to two additional warehouses in China each year, we estimate annual sq ft. growth can reach ~7% by 2024. Assuming a new warehouse productivity of ~55%, in line with COST's L-T average, this level of growth would add ~4% to international net sales growth (~1.5% to total)."

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