Northcoast upgrades Costco on share gains, special dividend potential

Northcoast analyst Chuck Cerankosky upgraded Costco to Buy from Neutral with a $560 price target. The company’s fiscal Q2 performance exceeded expectations and set the stage for a strong second half of fiscal 2023 despite the challenges of high inflation and the reluctance of many consumers to purchase discretionary merchandise, the analyst tells investors in a research note. The analyst says Costco’s strong value proposition in consumables to household supplies to gasoline "not only allows it to retain its many loyal members, but attract new ones." It believes 2023 will set the company up for "another stage of overall market share gains." Further, an "impeccable balance sheet" makes a special dividend of at least $10 per share as well as more, share repurchases likely during the next 12-24 months, Northcoast says.