In a strategic move to broaden its range of pharmaceutical services, Costco (COST, Financial) Wholesale has entered into a partnership with Lumicera Health Services, a leading provider of specialty pharmacy solutions. This collaboration aims to enhance the availability of specialty medications, ensuring transparency in pricing and unparalleled patient support.
This venture enables commercial employer benefit plan sponsors and Pharmacy Benefit Managers who collaborate with Costco's cost-plus pharmacy to access essential, high-cost medication therapies at verifiable prices. Costco seeks to leverage Lumicera's decade-long expertise in handling medications that require special logistics, including refrigeration.
Lumicera, recognized among the top 15 specialty pharmacies in the United States, operates a comprehensive patient support system. In 2024, the company earned a distinguished patient net promoter score of 85.5, reflecting its commitment to quality care. The model features Centers of Excellence that offer continuous, personalized support and treatment plans managed by a trained staff.
Through this alliance, Costco aims to enhance its services for patients with chronic and rare conditions, providing them with the tailored assistance and resources they require. This initiative not only expands Costco's operational capabilities but also aligns with its commitment to delivering exceptional service and support in the healthcare sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 32 analysts, the average target price for Costco Wholesale Corp (COST, Financial) is $1,067.98 with a high estimate of $1,205.00 and a low estimate of $890.00. The average target implies an upside of 9.81% from the current price of $972.54. More detailed estimate data can be found on the Costco Wholesale Corp (COST) Forecast page.
Based on the consensus recommendation from 41 brokerage firms, Costco Wholesale Corp's (COST, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Costco Wholesale Corp (COST, Financial) in one year is $707.40, suggesting a downside of 27.26% from the current price of $972.54. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Costco Wholesale Corp (COST) Summary page.
COST Key Business Developments
Release Date: March 06, 2025
- Net Income: $1.788 billion or $4.02 per diluted share, up from $1.743 billion or $3.92 per diluted share last year.
- Net Sales: $62.53 billion, an increase of 9.1% from $57.33 billion last year.
- US Comparable Sales: Up 8.3% or 8.6% excluding gas deflation.
- Canada Comparable Sales: Up 4.6% or 10.5% adjusted for gas deflation and FX.
- Other International Comparable Sales: Up 1.7% or 10.3% adjusted.
- E-commerce Comparable Sales: Up 20.9% or 22.2% adjusted for FX.
- Membership Fee Income: $1.193 billion, an increase of 7.4% year-over-year.
- Gross Margin: 10.85%, up 5 basis points year-over-year.
- SG&A Rate: 9.06%, lower by 8 basis points year-over-year.
- Capital Expenditure: Approximately $1.14 billion in Q2.
- Paid Household Members: 78.4 million, up 6.8% versus last year.
- Executive Memberships: 36.9 million, up 9.1% versus last year.
- Store Openings: Projecting 28 new openings during fiscal year '25, with 25 net new buildings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Costco Wholesale Corp (COST, Financial) reported a net income increase to $1.788 billion, or $4.02 per diluted share, up from $1.743 billion, or $3.92 per diluted share, in the same quarter last year.
- The company plans to open 28 new warehouses during fiscal year 2025, including significant expansions in the U.S. and internationally.
- Membership fee income grew by 7.4% year-over-year, with a U.S. and Canada renewal rate of 93% and a worldwide rate of 90.5%.
- E-commerce comparable sales increased by 20.9%, demonstrating strong growth in digital channels.
- Costco Wholesale Corp (COST) continues to invest in employee wages and benefits, with a new agreement that includes multiple wage increases over the next few years.
Negative Points
- Foreign exchange rate movements negatively impacted international net income translation to U.S. dollars by $57 million.
- The company faces headwinds from tariffs and foreign exchange fluctuations, which could impact costs and pricing strategies.
- Core on core margins were lower by 8 basis points due to higher supply chain costs and mix changes in nonfood categories.
- Gasoline sales were down low single digits due to lower volumes, impacting ancillary business performance.
- Inflationary pressures, particularly in fresh foods like meat and bakery, are affecting overall cost structures.
