UBS Reiterates Buy Ahead of Costco Wholesale's (COST) 4Q Report
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UBS reiterated a Buy rating and $180.00 price target on Costco Wholesale (NASDAQ: COST) ahead of the company's 4Q earnings report.
Analyst Michael Lasser commented, "Given all of the controversy over COST, having a chance to hear from management should provide a chance for the market to be reassured. Plus, it also gives an opportunity to hear how significant some of its long-term drivers are. Its old mainstays like MFI should be stable. Further, COST generated 2%+ traffic growth, suggesting that its membership renewals likely remained strong (we est. 90.5% in the US & Canada). This is what drives our MFI est. of $840 mm, which is ahead of the cons. of $835 mm. Also, COST's MFI should benefit from a higher % of stores opening in countries offering Exec. Memberships (TTM of ~83% vs. ~74% a year ago). Plus, moderating FX pressures should help (we est. -70 bps vs. -120 bps in 3Q'16 & -380 bps in 4Q'15). Seeing solid gains in this metric should be a sign to the market that COST is poised to raise its membership fees, which will be a positive for it shares."
Shares of Costco Wholesale closed at $153.15 yesterday.
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