THE APEX TIMES
Morgan Stanley Keeps a Buy Call on Costco, Sets a $1,130 Price Target
Analyst Simeon Gutman pointed to Costco’s scale, supply-chain efficiency, and value-focused strategy, even as he flagged slower paid membership additions.
Morgan Stanley analyst Simeon Gutman reiterated a Buy rating on Costco Wholesale (COST) and set a $1,130 price target in a report dated May 29, according to TipRanks’ summary of the note. TipRanks report
In explaining the rating, Gutman emphasized Costco’s “structural strengths,” including its scale, supply chain efficiency, and value proposition - factors he said support continued market share gains and durable earnings growth. The note also described Costco’s willingness to reinvest in lower prices, which Gutman linked to a modest year-over-year decline in “core-on-core” gross margin driven by lower pricing in key categories and higher transportation costs. TipRanks report
Costco’s underlying business model - membership warehouse clubs - ties closely to how Wall Street watches profitability and member momentum. In Costco’s most recent posted quarterly results (for the second quarter of fiscal 2026 ended Feb. 15, 2026), the company reported net sales of $68.24 billion, up 9.1% year over year, and comparable sales gains across regions. The same release showed that digitally-enabled comparable sales rose 22.6% for the quarter (adjusted). Costco investor relations
The Morgan Stanley note also acknowledged a slowdown in paid membership additions, while arguing that Costco’s membership model and “upgraded tiers” can help sustain momentum. For investors, that frames the key tension: Costco’s value push can pressure gross margin in the near term, but member retention and fee economics are what ultimately determine whether earnings growth stays resilient. TipRanks report
More broadly, analyst reiterations like this can reinforce sentiment around Costco as investors weigh whether warehouse-club growth is durable in a softer consumer spending backdrop. With the note citing both margin tradeoffs and membership dynamics, the next company updates on comparable sales, membership fee trends, and digital progress are likely to be closely watched for signs that the strategy is translating into steady results. TipRanks report
Costco did not comment publicly in either the analyst summary or the company results release provided here specifically about Morgan Stanley’s rating action. As with all Wall Street price targets, the $1,130 figure reflects the analyst’s assumptions rather than company guidance; readers should treat it as one viewpoint until corroborated by subsequent earnings disclosures and member metrics. Costco investor relations
Why It Matters
- The reiteration keeps a bullish stance on Costco at a time when gross margin and membership growth are key investor checkpoints.
- Gutman’s focus suggests that the market will continue to scrutinize how Costco balances lower pricing (value) with profitability.
- Higher digital comparable sales, if sustained, could support confidence in Costco’s long-run growth engine beyond store traffic.
- If paid membership additions remain sluggish, investors may look for evidence that retention and tier mix offset the slowdown.
- The $1,130 price target is a forecast, not a company commitment - so future earnings and membership fee disclosures will be the main test.
Sources
Key Facts
- Morgan Stanley analyst Simeon Gutman reiterated a Buy rating on Costco in a report dated May 29.
- The note set a $1,130 price target for Costco.
- Gutman cited Costco’s scale, supply-chain efficiency, and value proposition as drivers of market share gains and durable earnings growth.
- The analyst described a modest year-over-year decline in “core-on-core” gross margin linked to lower prices and higher transportation costs.
- The note said paid membership additions are slowing but argued Costco’s membership model and upgraded tiers support momentum.
- In Costco’s fiscal 2026 second-quarter results (ended Feb. 15, 2026), net sales rose 9.1% to $68.24 billion and digitally-enabled comparable sales grew 22.6% (adjusted).
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