Shares of Costco Wholesale Corp (NASDAQ:COST) fell 1.5% to $888 in premarket trading on Friday after the retail giant reported fourth-quarter revenue that fell short of market expectations.
The company's performance was impacted by cautious consumer spending on higher-priced items at its membership-only stores and a decline in gasoline prices.
On Thursday, Costco reported fourth-quarter revenue of $79.70 billion, slightly below analysts' estimates of $79.97 billion, according to data from LSEG.
Despite the revenue miss, several brokerages expressed optimism about Costco's future prospects and raised their price targets.
Roth MKM increased its price target to $755 from $676, citing Costco's strong market share gains, opportunities for unit expansion, growing appeal among young households, and high return on invested capital (ROIC) opportunities for reinvestment.
The brokerage noted that while Costco lags behind its peers in developing its digital ecosystem, the company is enhancing its online platform by adding third-party vendors and personalizing the shopper experience.
Among 38 brokerages covering Costco, 24 have a "buy" or higher rating on the stock, while 14 recommend a "hold."
The median price target stands at $940.
Despite the premarket decline, Costco's stock has risen 36.6% year-to-date as of the last close, outperforming many of its retail industry peers