BMO Says Buy Costco Shares For This Reason

Posted on

According to BMO Capital Markets, now may be a good time to look at Costco shares.

The firm has raised its rating on the stock from “market perform” to “outperform” and has cited strong e-commerce sales growth as its reason.

BMO analyst Kelly Bania wrote in a note, “We believe an acceleration in Costco’s online business is in early stages and could continue to support a strong comp outlook and higher valuation as the company widens its competitive moat.”

The analyst raised her price target from $160 to $215, which is a 12% premium compared to Friday’s closing price.

It was last week that Costco reported better than anticipated quarterly results for the first quarter. Online comparable sales have risen over 40% in the November quarter compared to the quarter a year ago.

According to Bania, the fact that Costco has launched two online grocery delivery offerings recently, strong online sales will most likely continue.

Bania wrote, “We believe that Costco now has more valuation support given its potential to gain a greater share of total wallet from its loyal membership base.”

Disclaimer: We have no position in Costco Wholesale Corporation (NASDAQ: COST) and have not been compensated for this article.