Oppenheimer : Analysts Upgrade Costco to Outperform

Recent Underperformance Creates an Attractive Entry Point

Oppenheimer analysts are upgrading Costco shares to Outperform from Perform and re-establishing the stock as a top pick following our downgrade in a note titled Upside Potential Now More Limited; Downgrading to Perform (9/11/19 at $297). Our analysts' price target goes to $335 from $300.

Since late August, Costco shares have lagged up 3% vs. a gain of 14% in the S&P 500. Now, with a more accommodative valuation on a relative basis, the potential for well above peer top-line trends set to continue, and prospects for a special dividend, we again see the case for outperformance.

As our team looks to the balance of 2020, we overall see a muted upside outlook for our food retailing universe, but believe Costco can deliver outsized gains vs. peers in this backdrop.

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• Investing,
• Retail