NEW YORK -- An analyst for BMO Research on Monday raised his rating on CostCo Wholesale Corp., saying he's less worried about high costs hurting the company's profitability.
Analyst Wayne Hood raised his rating to "Market Perform" from "Underperform." He had been concerned about Costco's gross margin rate, or profitability. The rate has been hurt as costs for stocking shelves have increased for Costco and other big-box retailers. He said cost pressures have eased.
Hood also noted that the rate at which Costco's shoppers renewed their membership increased slightly to 86.4 percent in the fiscal fourth quarter even after a fee increase last winter.
He raised his earnings forecast to fiscal 2013 forecast to $4.53 from $4.43. Analysts polled by FactSet expect profit of $4.52 for the year, which ends in August 2013.
Hood's move comes after the wholesale club operator, based in Issaquah, Wash., last week reported a higher net income in its latest quarter after drawing more shoppers and signing up more new members. Its performance beat Wall Street expectations and its shares hit an all-time high.
Costco ended the fiscal year with 608 warehouses in operation worldwide. The company plans to open as many as 30 new warehouse clubs in the year ending in August 2013.
Shares dipped 5 cents to $97.50 Monday morning. Shares peaked at $104.43 last Wednesday. They're up about 17 percent this year.