Oppenheimer analyst Rupesh Parikh removed Costco Wholesale from "top pick status" after the company reported a November U.S. comp increase of 4.6% excluding gas. The company’s three-year U.S. adjusted comp trends weakened significantly to up 27.9% from up 34.2% in October, primarily driven by softening trends in the non-foods category, Parikh tells investors in a research note. When coupled with his existing concerns on "aggressive" Street forecasts, Parikh now expects an "even more material reset" in consensus forecasts for Costco. The analyst has observed additional price reductions on consumer electronics products and new promotions to drive big-ticket purchases. "These appear to not be sufficient to offset difficult multi-year compares," he writes. However, Parikh keeps an Outperform rating on the shares with a $550 price target. For longer-term players, he recommends continuing to buy Costco on dips.
Published first on TheFly
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