Costco Wholesale Corp (NASDAQ: COST) has had a decent run this year, making new highs within the past 12 months. However, after reaching a peak in July, the stock has since pulled back.
Are new highs in sight for Costco? Wall Street analysts believe that COST stock is likely to move higher within the next 12 months.
The average analyst target price sees a 7% gain
In particular, analysts on TipRanks are overwhelmingly positive about the stock with 17 out of 20 analysts giving it a ‘Buy’ rating in the past three months.
Their average target price is $588 for the next 12 months. That’s 7% above the current market price of $549. Some analysts from Deutsche Bank, Jefferies, and Loop Capital markets see Costco shares trading above $600.
Nine analysts maintained or reiterated on August 31 their ‘Buy’ or ‘Hold’ ratings after Costco reported its August sales one day prior. The company reported net sales of $18.42 billion, which is an increase of 5% from the same month last year. That was enough for most analysts to keep their bullish stance on the stock.
However, for some investors, a reasonable concern could be the insider sales this year. Six executives have sold Costco shares worth a total of $8.8 million and not one bought a single share since January.
Of course, insiders could sell their shares for a number of reasons, including diversifying their portfolio and needing liquid funds. Given that Costco is doing well financially, insider sales at these numbers shouldn’t be a worrying sign.
Costco stock technical analysis
Costco has been trading in an ascending channel since March this year. Its stock price has made two attempts to break out of the channel but it turned out to be a fake move.
In August, the stock price broke out from the lower side once again and is now trading near the $550 resistance level. Aside from being a round number, this level coincides with the lower trendline of the channel, making it a hard price level to crack.
There are two potential outcomes in this scenario. Either the stock price returns within the channel once again and keeps trading until another break out happens, or we see the stock price drop to $525, which is the next support level on the way to $500.
Even with this pull pack, the Costco stock has outperformed the S&P 500’s 17% return with a 21% gain to its investors year-to-date.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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