Costco Wholesale Corp. (NASDAQ: COST) reported better-than-expected fourth-quarter fiscal 2026 results on Thursday, prompting mixed reactions from analysts regarding its price targets. Despite the earnings beat, shares fell 0.9% in pre-market trading.

The retailer logged quarterly earnings of $6.75 per share, surpassing the consensus estimate of $6.52. Quarterly revenue reached $95.72 billion, exceeding the Street estimate of $94.86 billion. This performance highlights strong operational execution, though market reaction remained cautious in early trading sessions.

Analyst Reactions and Price Target Adjustments

Following the announcement, key analysts revised their outlooks. While the rating consensus remained largely positive among major firms, price targets were adjusted downward, reflecting valuation recalibrations post-earnings. Notably, Roth Capital maintained a bearish stance, reiterating a Sell rating with a $781 price target.

Bernstein analyst Zhihan Ma maintained an Outperform rating while lowering the price target from $1144 to $1143. The minor reduction indicates a slight adjustment in valuation assumptions without altering the firm's positive stance on the retailer's long-term prospects.

Mizuho analyst David Belinger also maintained an Outperform rating but slashed the price target from $1100 to $1065. This more significant cut suggests a tighter view on near-term upside potential despite the earnings beat.

JP Morgan analyst Christopher Horvers maintained an Overweight rating but lowered the price target from $1100 to $1015. This represents the most substantial reduction among the bullish firms, indicating a broader reassessment of valuation multiples relative to current share prices.

Raymond James analyst Bobby Griffin maintained an Outperform rating but reduced the price target from $1100 to $1050. This adjustment aligns with the broader trend of bullish firms trimming targets to reflect current valuation levels.

Deutsche Bank analyst Krisztina Katai maintained a Buy rating but lowered the price target from $1091 to $1079. This moderate reduction reflects a slight recalibration of value expectations while retaining confidence in the company's fundamentals.

Roth Capital analyst Bill Kirk reiterated a Sell rating and maintained a $781 price target. This action stands in contrast to the bullish ratings from Bernstein, Mizuho, JP Morgan, Raymond James, and Deutsche Bank, highlighting a divergence in analyst views on Costco's valuation ceiling.

What the Numbers Show

The divergence in analyst actions highlights a nuanced market response to Costco's Q4FY26 performance. All five major firms (Bernstein, Mizuho, JP Morgan, Raymond James, Deutsche Bank) maintained positive ratings (Outperform, Overweight, or Buy), signaling confidence in the company's fundamental strength as evidenced by the revenue and EPS beats. However, the magnitude of the price target reductions varies sharply: Bernstein’s $1 cut is negligible, whereas Mizuho’s $35 reduction, Raymond James’ $50 reduction, and JP Morgan’s $85 reduction represent material resets. Deutsche Bank’s $12 reduction sits between these extremes.

The inclusion of Roth Capital's unchanged Sell rating at $781 further underscores this split. While bullish firms see limited room for multiple expansion, they still value the stock significantly higher than the bearish case. This suggests that while operational results met or exceeded expectations, the debate has shifted from performance execution to valuation sustainability.

Costco Wholesale Corp (NASDAQ: COST) reported fourth-quarter earnings of $6.75 per share, exceeding the consensus estimate of $6.52. Revenue reached $95.72 billion, surpassing the Street estimate of $94.86 billion.

The retailer’s non-foods categories faced inflationary pressure, primarily driven by elevated memory costs in consumer electronics and gas and petroleum-based items. This cost environment resulted in a significant accounting charge that impacted gross margins, even as top-line growth remained robust.

Earnings Beat and Margin Pressure

While earnings per share and revenue beat expectations, gross margin came in slightly below estimates due to a greater mix of gasoline sales. However, operating income and EPS benefited from expense leverage. The company recorded a $152 million LIFO charge, up from $43 million a year earlier, directly attributed to memory-cost inflation in electronics and higher costs tied to oil-related products.

Comparable sales performance was strong, with total comparable sales rising 9.4%, or 6.7% excluding foreign exchange and gasoline price changes. U.S. comparable sales increased 10.7%, or 7.2% on the same basis. Membership fee income was in line with expectations.

Analyst Reactions and Price Targets

Following the results, several analysts revised their outlooks for Costco, maintaining various ratings while adjusting price targets based on the new earnings data and margin dynamics.

RBC Capital noted that Costco’s underlying fundamentals remain stable, though valuation multiples remain a challenge. The firm projects comparable sales growth of 6% in fiscal 2027 and 6.1% in fiscal 2028, raising adjusted EPS estimates to $22.86 and $25.01, respectively. Bank of America also raised its EPS estimates for fiscal 2027 through 2029, citing the company’s value-focused strategy and higher-income customer base.

What the Numbers Show

The divergence between the EPS beat and the gross margin miss highlights the tension between volume growth and input cost inflation. While total comparable sales grew 9.4%, the $152 million LIFO charge—more than triple the prior year's $43 million charge—indicates that memory component costs are significantly eroding profitability in the electronics category. This suggests that despite strong consumer demand (evidenced by the 10.7% U.S. comp growth), the cost structure for specific high-volume electronics items is becoming less favorable, requiring offsetting efficiency gains elsewhere to maintain bottom-line growth.

Stock Performance

Costco Wholesale shares traded higher on Friday following the report. At the time of publication, shares were up 2.46% at $918.53.