Costco Earns Buy Rating on Projected 20% Earnings Growth and Expansion
Issaquah, Friday, 26 December 2025.
Northcoast Research upgrades Costco to “Buy” with a bold $1,100 price target, driven by a projected 20% earnings growth over two years and robust global expansion strategies.
Northcoast Issues Bullish Outlook with $1,100 Target
In a significant move this week, Northcoast Research upgraded Costco Wholesale Corporation (NASDAQ: COST) from a neutral stance to a “Buy” rating, setting a price target of $1,100 [1][3]. This new target suggests a considerable upside of approximately 25.599% from the stock’s price of $875.80 reported on December 25, 2025 [3]. The upgrade, issued in a report on Wednesday, December 24, reflects a shift in sentiment driven by the retailer’s fundamental strengths despite recent market fluctuations [2]. Northcoast’s analysis posits that Costco is positioned for a “rare pullback” entry point, appealing to value-oriented investors looking to capitalize on the company’s long-term trajectory [2].
Earnings Momentum and Strategic Drivers
The core thesis behind Northcoast’s bullishness rests on a projection of approximately 20% earnings growth over the next two years [1]. Analysts at the firm cite the momentum of Costco’s wholesale club channel and its competitive positioning as primary engines for this expansion [1]. Furthermore, the potential for another sizable special dividend and continued global expansion opportunities are viewed as key catalysts for shareholder value [4]. This forward-looking optimism follows Costco’s fiscal first-quarter earnings report released on December 11, 2025, where the company posted earnings per share of $4.34, beating estimates of $4.27, and revenue of $67.31 billion, which exceeded expectations of $67.03 billion [2].
Market Sentiment and Valuation Divergence
Despite Northcoast’s confidence, the financial community remains divided on Costco’s near-term valuation. While the stock is currently trading below its 50-day simple moving average of $904.70 and its 200-day average of $940.94, indicating a recent downtrend, not all analysts view this as a buying opportunity [2]. For instance, Roth Capital downgraded the stock to “Sell” on December 15, setting a significantly lower price objective of $769 [2][3]. Conversely, other firms like Bernstein maintained an “Outperform” rating on December 12, raising their target to $1,146 [3]. Currently, the consensus recommendation among 38 brokerage firms stands at 2.2, indicating a general “Outperform” status, though price targets vary widely from a low of $643.33 to a high of $1,205.00 [3].
Operational Resilience and Scale
Underpinning the upgrade is Costco’s massive operational scale and efficient membership model. The company currently operates approximately 910 warehouses globally and serves over 80 million members [3]. Its revenue composition remains heavily anchored in essentials, with grocery items accounting for roughly 55% of fiscal 2025 revenue, providing stability against economic volatility [3]. Looking ahead, the retailer continues to execute its physical expansion strategy, with future projects such as a new location in Macon scheduled to open in the summer of 2027 [2]. This relentless focus on footprint growth and membership value reinforces the analyst view that Costco’s business model remains robust despite competitive pressures [1][2].