Costco Stock Faces 3% Swing as Traders Brace for Earnings

Costco shares could swing as much as 3% in either direction by the end of the week, options pricing shows, as the retailer prepares to report fiscal fourth-quarter earnings Thursday afternoon.

A move of that size from Tuesday's close could drag the stock as low as $873 — largely erasing its year-to-date gains — or push it up to $925, based on current options pricing. Costco (COST) shares are up less than 5% for the year, after a big pullback from their May record.

The stock got a boost earlier this year as inflation-weary consumers flocked to the wholesaler in search of deals. It has since taken a hit after results that failed to top lofty targets.

Analysts Turn Cautious on Margins

Ahead of the results, Bank of America analysts trimmed their price target on Costco to $1,095 from $1,200. They cited a "more cautious" view of Costco's margins amid high fuel costs and the likelihood that Costco will use tariff refunds to cut prices.

UBS analysts said investors could also focus closely on Costco's membership growth when the numbers land.

Despite signs that Costco's value proposition is resonating with consumers, the company could struggle to impress investors in the face of macroeconomic headwinds, analysts warned.

Record Revenue Expected

Costco is projected to report a record $94.85 billion in fiscal fourth-quarter revenue, up 10% year-over-year, according to Visible Alpha estimates. Earnings per share are seen coming in at $6.52, compared to $5.87 a year ago.

Comparable store sales are expected to have grown 8.88%. Costco's membership base likely swelled to 84.68 million, up from 81 million a year ago.

Wall Street Stays Bullish

Wall Street analysts remain largely positive on the stock. Seven of the 11 analysts tracked by Visible Alpha rate Costco a "buy," while three hold neutral ratings and just one advises selling.

Their mean price target of $1,048 implies 16% upside from Tuesday's close.

The bar is high. After a year in which Costco repeatedly failed to beat elevated expectations, Thursday's report will test whether record revenue and 10% growth are enough to satisfy investors — or whether the shares give back what remains of their 2024 gains.