Is Costco (COST) Stock Going to $1,200?

Company Performance - Costco's stock has increased nearly 180% over the past five years, driven by strong sales, membership growth, high renewal rates, and new store openings [1] - From fiscal 2020 to fiscal 2025, the number of Costco warehouses grew from 795 to 914, total cardholders increased from 105.5 million to 140.6 million, and the global renewal rate rose from 88% to 90.5% [2] - Despite macroeconomic challenges, including inflation and rising interest rates, Costco continued to attract new members even after raising membership fees for the first time in seven years in late 2024 [3] Recent Developments - In the first quarter of fiscal 2026, adjusted net sales increased by 6.4%, the number of warehouses rose to 923, and cardholders climbed to 145.9 million, but the global renewal rate fell to 89.7% [4] - The company anticipates that renewal rates may decline slightly in the coming quarters due to lower rates among digitally signed members [4] Future Outlook - Analysts project Costco's revenue and EPS to grow at CAGRs of 8% and 11% from fiscal 2025 to fiscal 2028, but these growth rates may not justify its current premium valuation [6] - If Costco's stock trades at a more reasonable 25 times forward earnings by the end of fiscal 2028, it could decline nearly 40% to $617, while maintaining a 49 times forward earnings could push the stock above $1,200 [6] - The company's stock may remain stagnant or decline slightly over the next two years as it works to stabilize renewal rates, with a potential to reach $1,200, but likely not by the end of fiscal 2028 [7]