Why Costco Stock Is Poised to Hit $1,000 Again Soon

Key Points

• Shares of Costco are down nearly 15% from February’s record high, erasing all gains since November.
• Evercore ISI just raised its price target to $1,070, implying a 15% upside.
• An RSI of 30 signals extreme oversold conditions, making a near-term bounce quite likely.

Costco Wholesale Corp NASDAQ: COST has been on an unstoppable rally since late 2022, consistently hitting new highs and rewarding long-term investors. That momentum carried into February when the stock reached an all-time record. However, a combination of a broader market sell-off and a slight earnings miss last week has led to a sharp reversal. Shares are now down nearly 15% from their peak, wiping out all gains since last November.

While a pullback like this isn’t unusual after a strong run, the magnitude of the decline has caught many by surprise. Investor sentiment has turned sharply risk-off in recent weeks, making it difficult for even high-quality stocks like Costco to hold onto gains.

But with the stock now at oversold levels and analysts reaffirming their bullish stance, this dip could present a compelling buying opportunity.

Costco Earnings Miss Accelerates the Decline

Costco’s latest earnings report last week was a mixed bag. Revenue came in strong, growing 9% year over year to a new record, but earnings fell slightly short of expectations. Instead of an ESP of $4.11, which analysts had been expecting, Costco delivered an ESP of $4.02. 

In the grand scheme of things, it wasn’t a massive miss, and if the broader market was in an uptrend, it might have been easily glossed over, but with the S&P 500 down close to 10%, it was also going to spook investors. While shares were already pulling back from their February high, the earnings miss intensified the decline, pushing the stock to a fresh multi-month low.

However, despite the initial negative reaction, the fundamental story remains intact. Revenue growth at this scale, particularly in the current economic environment, underscores Costco’s ability to drive consistent performance. The company continues benefiting from strong membership renewals, steady foot traffic, and well-established pricing power.

Wall Street Sees a Rebound Coming for Costco 

Backing up this theory is the fact that despite the sell-off, many analysts remain confident in Costco’s long-term trajectory. Since the earnings report, several teams have reiterated their bullish stance. For example, those from Cowen and Loop Capital reaffirmed Buy ratings last week, while Evercore ISI took it a step further yesterday and increased its price target to $1,070.

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From where Costco stock closed earlier this week, this suggests a targeted upside of 15%. 

Analysts' key argument is that the reaction to the earnings miss has been overdone. While missing expectations is never ideal, particularly when market sentiment is weak, Costco’s fundamental strength remains intact. The company continues to execute at a high level, and its defensive business model makes it well-positioned to weather market volatility.

Costco Technical Setup Suggests a Bottom Could Be Near

The idea that this could be an ideal entry point is supported by the fact that from a technical standpoint, Costco is now at levels that should be attractive to many retail and institutional investors. The stock’s RSI has dropped to 30, indicating extreme oversold conditions that rarely persist for long. Stocks with strong fundamentals that reach this level typically see a bounce in the short term, if not a full recovery in the medium-to-long term.

Additionally, Costco is now trading near a long-term support line, further reinforcing the possibility that a bottom could be forming. If buyers start to step in at these levels over the coming sessions, it’s not unreasonable to think Costco will soon be a four-figure stock once again, which would bode well for its prospects through the rest of the year.

Buy-the-Dip Opportunity for Costco

There’s no getting away from the fact that Costco’s recent pullback has erased months of gains, but analysts and technical indicators suggest this could be a temporary setback. Evercore ISI’s price target of $1,070 points to some solid upside, while the stock’s RSI suggests selling pressure has reached unsustainable levels. For long-term investors, this dip may present one of the best entry points in months.