Costco Holiday Blowout Signals Strong Stock Recovery Ahead: Analyst

Core Insights - Costco Wholesale Corporation's stock increased following strong monthly sales data, indicating steady demand in both U.S. and international markets [1] - JP Morgan analyst Christopher Horvers maintains an Overweight rating on Costco with a price target of $1000, highlighting the company's market share gains and improving traffic trends [1][2] Sales Performance - Comparable sales are expected to accelerate due to easier comparisons and stimulus spending, with consumables making up about 70% of Costco's product mix [2] - U.S. core comparable sales rose 6.3% in December, surpassing consensus and internal expectations, while total enterprise traffic increased by 2.7% year over year [3][4] - Average ticket size increased by 3.4% when excluding gas price deflation and foreign exchange impacts [4] Regional Insights - The Midwest, Northwest, and Southeast regions led U.S. performance, while Australia, Japan, and Korea contributed to international strength [5] - Weather negatively impacted some Northeast demand in December, but comparisons against BJ's were less unfavorable [5] Membership and Revenue - Membership fees account for approximately half of Costco's operating profit, providing strong pricing power and margin flexibility [3] - Executive membership sign-ups rose to 80,000 per week, contributing to a 5% growth in membership fee income this quarter [6][7] Future Outlook - Strong November and December results suggest Costco "won the holidays," with expectations for continued sales growth as year-over-year comparisons ease [6] - Anticipated spring tax stimulus is expected to further enhance Costco's demand profile [6]