Costco's Extended Hours Bolster Strong Comps, Analyst Recommends Disciplined Buy

Costco Wholesale Corporation (NASDAQ:COST) shares are trading relatively flat on Thursday.

On Wednesday, the company reported net sales of $20.89 billion for the retail month of July, an increase of 8.5% from $19.26 billion last year.

JP Morgan analyst Christopher Horvers reiterated the Overweight rating on the stock, raising the price forecast from $1,115 to $1,160.

Horvers noted that Canada and Other International core comps significantly outpaced Street forecasts—9.1% versus 5.7% and 7.5% versus 6.4%—with the Northwest, Midwest, and Southeast driving U.S. growth and Australia, Taiwan, and Mexico leading internationally.

Also Read: Applovin Analysts See ‘Muted Upside,' Cautious On Company's Success Outside Of Gaming

The analyst added that e-commerce sales rose 14.9% ex-FX, July's cannibalization headwind eased to 50 bps, and the Northeast fell off the "best of" U.S. regions list, reinforcing concerns that BJ's Wholesale Club Holdings, Inc. (NYSE:BJ) comps might slightly undershoot the Street's 3.2% consensus.

Horvers stated that Costco's introduction of extra hours—adding an early weekday start for executive members and a later Saturday close—has already delivered roughly a 1.5-point lift to comparable sales, with broader gains likely as awareness grows.

The analyst added that while some clubs have seen tangible sales increases, others have mainly experienced enhanced member satisfaction.

Horvers expects Costco to break out the sales benefit versus operating cost on its fourth-quarter conference call in September and believes the upside could accelerate around peak holiday shopping periods.

These apart, the analyst noted that July benefited from easier year-ago comparisons—hurricanes and a consumer pause in late July 2024—that the market may be factoring into recent gains.

Horvers added that non-food sales stayed robust even as monthly gold bar growth hit a two-year low, with comparison ease extending beyond August.

Horvers observed that Costco is unique in having succeeded in every country it has entered, and its club model ranks just behind auto parts—the top‐performing retail sector in his view.

The analyst added that with Costco as the clear market leader in the club space, Horvers remains a "disciplined buyer".

Price Action: COST shares are trading higher by 0.62% to $974.56 at last check Thursday.

Read Next:

• Benzinga's ‘Stock Whisper' Index: 5 Stocks Investors Secretly Monitor But Don't Talk About Yet

Image by Steve Travelguide via Shutterstock