Top analyst has bold Costco stock outlook for 2026

Costco Wholesale (COST) shares slipped on Monday, June 29, as one of Wall Street's top retail analysts delivered an attention-worthy message on the stock.

Bernstein analyst Zhihan Ma named Costco and discount chain Dollar General (DG) her top retail picks for the second half of 2026. 

Earlier this week, she raised her Costco price target to $1,194 from $1,192 and kept her outperform rating.

That target sits well above COST's Thursday, July 2, close of $951.67. 

Even after climbing more than 11% since January, the stock still has room to run.

Ma's call boils down to a simple idea. While inflation keeps squeezing household budgets, Costco keeps finding ways to turn that squeeze into an advantage.

Why Bernstein sees Costco outrunning the rest of retail

Ma's optimism about Costco starts with a view on shoppers that most retail analysts share right now.

Energy prices tied to the Middle East crisis have started easing, according to TipRanks. However, she still expects inflation to pressure shoppers as higher packaging and fertilizer costs work through supply chains. 

Add in the threat of fresh tariffs, and lower-income households will continue struggling while wealthier shoppers keep hunting for deals.

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Costco's growth engine keeps humming

Costco tends to thrive in exactly this kind of environment.

Ma pointed to the retailer's recent double-digit sales growth, much of it fueled by traffic at Costco's gas stations as drivers search out cheaper fuel.

"Although gas inflation is starting to moderate, we expect Costco to generate about 6-7% comparable sales growth, excluding gas and foreign exchange, which, coupled with the prospect of a special dividend, should support the stock in the near term," Ma wrote, according to TipRanks.

Costco's own numbers are doing the heavy lifting

Bernstein's call isn't happening in a vacuum.

Costco's fiscal third-quarter net sales climbed 11.6% to $69.15 billion, according to the company's SEC earnings release. Total revenue reached $70.53 billion, topping Wall Street's forecast. 

Net income also jumped 15% to $2.19 billion, or $4.93 per diluted share.

Membership income and the dividend story

Membership fee income, the recurring, high-margin revenue that props up Costco's business model, rose 10.7% to $1.37 billion. 

Executive memberships, the pricier tier that signals deeper loyalty, grew 9.6% to 41.2 million. 

CEO Ron Vachris also told investors the company logged its five best gas-volume weeks everto close the quarter. This happened as drivers sought lower prices amid the conflict in the Middle East, according to CNBC.

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Costco sweetened its dividend too, lifting the quarterly payout 13% to $1.47 per share in April. 

On tariffs, Vachris said Costco has begun filing refund claims tied to the Supreme Court's ruling striking down certain import levies. Proceeds are designated to keep member prices low rather than pad margins.

How Bernstein's target stacks up against the rest of Wall Street

Ma isn't the only analyst betting big on Costco. Price targets across Wall Street span a wide range, and Bernstein's $1,194 sits near the very top of that pack.

Where major firms stand on Costco stock:

• Bank of America: $1,200, buy rating
• Bernstein: $1,194, outperform rating
• Goldman Sachs: $1,159, buy rating
• JPMorgan Chase: $1,110, overweight rating
• Raymond James: $1,100, outperform rating
• Citi: $1,020, neutral rating
• Truist Financial: $1,011, hold rating
  Source: MarketBeat

Put together, Wall Street's consensus price target lands at $1,103.66, implying about a 17% increase, according to data covering 24 analysts. 

Sixteen rate the stock a buy, seven say hold, and just one recommends selling. This is a rare level of agreement for a stock trading at roughly 40 times profits.

What could still derail the Costco bullish case

None of this makes Costco a sure buy. 

The stock's price-to-earnings ratio near 40 shows investors are already betting on years of strong performance. 

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• Wall Street expects Costco to surge 16%, amid macro volatility
• Dollar General CEO exposes bitter reality about today's economy
• Why Costco Has Outpaced the Nasdaq for Five Years

That high bar means any slip in comparable sales or membership renewals could hurt the stock more than it would a cheaper retailer.

Investors watching for the next catalyst should track Costco's July sales report and any update on the special dividend Ma flagged. 

A payout announcement could give the stock a fresh jolt, much like it did last time. 

For now, buying at current levels means betting that Bernstein's math holds up, and that Costco's loyal members keep opening their wallets. This is even as the broader economy stays uncertain.

Related: Costco stock price shocks market despite major blowout quarter