By Sam Boughedda
Costco (NASDAQ:COST) dipped early Friday on the back of its fiscal first-quarter earnings release that missed analysts' estimates.
The big box retailer posted earnings of $3.07 per share, $0.05 worse than the analyst estimate of $3.12, with revenue for the quarter coming in at $54.4 billion below the consensus estimate of $54.79B.
Net sales for the first quarter increased by 8.1%, but adjusted e-commerce sales dipped by 2%.
Following the report, Deutsche Bank analysts maintained a Buy rating on the stock but cut the price target to $574 from $578, telling investors that overall, Costco handed in a generally in line 1Q. With adj. "EPS at $3.10 (DB $3.11 and Street $3.10); however, we think the debate on near-term top-line trends will continue given the softness in big-ticket discretionary categories," wrote the analysts. "Key takes include: 1) price investments in its foods business to further enhance its value proposition, which we think will drive continued positive traffic to clubs; 2) ongoing market share gains in grocery and fuel gallons (up 10-15% vs. a flat to down overall industry); 3) sustained strength in MFI with the three-year growth at 25% cFX vs. the 2022 average of 24%; and 4) good progress on inventory levels (+9.6% YOY vs. +26.0% in 4Q)."
Elsewhere, Wolfe Research analysts maintained a Peer Perform rating on the stock. They told investors: "Costco reported mixed F'1Q results as comps decelerated throughout the quarter and gross margins missed expectations."
"Renewal rates continue to be very strong and we think that the business is poised to continue gaining share as consumers look for value. The slowdown in some big ticket items is a bit concerning though and could be a sign that the weakness from the lower income consumer is starting to spread to Costco's more affluent customer."
Despite opening the session down, Costco shares have managed to move higher at the time of writing. They are currently up 0.75%, above the $485 mark.