Costco Wholesale Corporation (NASDAQ: COST) is under pressure on Tuesday, December 16, 2025, as investors weigh a rare bearish analyst call against the company’s still-strong fundamentals and recent earnings beat. As of 14:59 UTC on Dec. 16, Costco shares traded around $849, down roughly 1.3% on the session, after swinging between an intraday high near $861 and a low near $849.
The timing matters: Costco’s fiscal Q1 2026 report (released December 11) showed steady core demand, strong digital growth, and rising membership-fee revenue. Yet the stock’s 2025 performance has lagged broader markets, and today’s headlines are amplifying an ongoing debate on valuation, membership trends, and how much “perfection” is already priced into COST.
What’s moving Costco stock today
The biggest catalyst in the current news cycle is a contrarian downgrade from Roth Capital—a relatively rare “Sell” call on Costco.
- Roth Capital downgraded COST to Sell from Neutral, cutting its price target to $769 from $906. Roth argued that Costco’s underlying metrics are “concerning,” pointing to fading renewal rates, slower paid member growth, and decelerating comp traffic—while also flagging intensifying competition as Walmart’s Sam’s Club and BJ’s Wholesale step up investments. [1]
- MarketWatch’s summary of the downgrade adds that Roth also tied its cautious stance to structural headwinds such as smaller household sizes and delayed household formation, arguing the risk/reward “skews to the downside.” [2]
In parallel, at least one additional sell-side update is adding to the “targets drifting down” narrative:
- Daiwa Capital Markets lowered its price target to $917 (from $947) while keeping a Neutral stance, according to MarketBeat’s report on the note. [3]
Costco’s latest earnings: the core business is still growing
Costco’s most recent quarter gives bulls plenty of ammunition—and it’s worth grounding the debate in the company’s own numbers.
In its official release for fiscal Q1 2026 (12 weeks ended Nov. 23, 2025), Costco reported:
- Net sales:$65.98 billion, up 8.2% year over year [4]
- Membership fees:$1.329 billion (part of total revenue) [5]
- Total revenue:$67.307 billion [6]
- Net income:$2.001 billion, or $4.50 diluted EPS, up from $4.04 a year earlier [7]
- Comparable sales (adjusted for gas and FX):+6.4% total company; digitally-enabled comps +20.5% [8]
One nuance: Costco said results included a tax benefit tied to stock-based compensation worth $0.16 per diluted share in the quarter. [9]
Reuters’ coverage of the same earnings report highlighted that Costco’s results benefited from value-seeking consumers ahead of the holidays, and pointed to strength in delivery partnerships (including Instacart in the U.S. and Uber Eats/DoorDash internationally). [10]
Why the stock is struggling despite strong results
If the business is executing, why the weak tape?
1) Valuation sensitivity is back in focus
A recurring theme across post-earnings commentary is that Costco is priced like a best-in-class compounder—and even small disappointments can hit the multiple.
Barron’s noted that investors’ reaction to earnings looked muted partly because Costco has been trading at a rich forward multiple (around the low-40s), and the quarter did not deliver a fresh catalyst like a special dividend. [11]
Zacks’ analysis (published Dec. 16) similarly emphasized premium valuation, citing Costco’s forward P/E well above peers and warning that, at elevated multiples, “minor setbacks could trigger a pullback.” [12]
2) Membership metrics are still excellent—yet the direction matters
Costco’s membership engine remains one of the most admired in retail. But today’s downgrade story is about whether the trend is flattening at the margin.
Zacks reported renewal rates of 92.2% in the U.S./Canada and 89.7% worldwide, and said membership fee income rose 14% year over year in Q1. [13]
At the same time, Truist’s note (summarized by Investing.com) argued that about half of membership fee income growth may be attributable to the prior membership price increase, while membership growth has slowed in recent quarters—with digital sign-ups cited as a factor because they “typically have lower renewal rates.” [14]
That interplay—strong absolute renewal rates, but slowing momentum—helps explain why a single “Sell” call can move the stock on a down day.
3) The “special dividend / stock split” crowd didn’t get a catalyst
Barron’s also pointed out that some investors were disappointed by the lack of a special dividend announcement, something Costco has done periodically in the past. [15]
Whether or not a special dividend happens, the market’s reaction suggests that expectations can become a risk factor when a stock is priced for consistent upside surprises.
Analyst forecasts and price targets: a wide range, but bulls still dominate
Despite the attention on Roth’s downgrade, the broader Street picture remains supportive.
The bearish outlier
- Roth Capital:Sell, $769 target [16]
The “neutral / valuation-aware” camp
The bullish camp (buy/outperform targets still far above today’s price)
- Goldman Sachs:Buy, target $1,171 (lowered from $1,218, but still bullish) [19]
- Telsey Advisory Group:Outperform, $1,100 target; expects double-digit EPS growth in FY2026 driven by mid-single-digit comps and membership fee growth [20]
- Bernstein:Outperform, $1,146 target [21]
Consensus snapshots (depending on the data source)
- MarketWatch (citing FactSet) said most analysts still lean positive, with more Buys than Holds and only a small number of Sells. [22]
- MarketBeat’s compilation shows a “Moderate Buy” consensus and an average target around $991 (with methodology caveats). [23]
- Nasdaq, citing Fintel data (as of Dec. 5), put the average one-year price target near $1,071, with a wide forecast range. [24]
The takeaway: Roth’s Sell call is notable because it’s rare, not because the Street has broadly flipped bearish on Costco.
Bull case vs. bear case for Costco stock heading into 2026
The bull case: Costco keeps compounding
Supporters of COST generally point to:
- Consistent traffic and comps, with digitally-enabled comps +20.5% in Q1 [25]
- Sticky membership economics and rising fee revenue [26]
- Value proposition that still resonates in a cautious consumer environment [27]
- Expansion runway: Costco continues opening warehouses, though at least one recent outlook discussed a slightly reduced near-term pace due to specific delays [28]
The bear case: “Great business, expensive stock”
Skeptics increasingly focus on:
- Any softening in renewal rates or member growth—especially if more signups shift online and renew less frequently [29]
- Competitive pressure (Sam’s Club and BJ’s) as rivals invest to narrow the gap [30]
- A valuation that may leave less room for execution risk (or simply less upside if growth normalizes) [31]
What investors should watch next
For readers tracking Costco stock into late 2025 and early 2026, the next big tells are likely to be operational rather than headline-driven:
- Membership renewals and paid member growth — especially commentary on digital signups and renewal behavior [32]
- Comparable sales trend — whether the ~6% adjusted comp pace can hold through tougher comparisons [33]
- Margin and cost discipline — wages, healthcare costs, and operating expenses (a key theme in analyst notes) [34]
- Any capital return surprise — special dividend chatter tends to return whenever Costco’s shares pull back [35]
- Guidance tone and expansion cadence — store openings, supply chain investments, and digital initiatives [36]
Bottom line
Costco stock is down today because the market is re-pricing the balance between excellent fundamentals and high expectations. The Roth Capital downgrade is fueling that reassessment—particularly around membership momentum and competition—while other analysts remain broadly constructive with targets still well above current levels. [37]
References
1. www.tipranks.com, 2. www.marketwatch.com, 3. www.marketbeat.com, 4. investor.costco.com, 5. investor.costco.com, 6. investor.costco.com, 7. investor.costco.com, 8. investor.costco.com, 9. investor.costco.com, 10. www.reuters.com, 11. www.barrons.com, 12. finviz.com, 13. finviz.com, 14. www.investing.com, 15. www.barrons.com, 16. www.tipranks.com, 17. www.marketbeat.com, 18. www.investing.com, 19. www.tipranks.com, 20. www.investing.com, 21. www.investing.com, 22. www.marketwatch.com, 23. www.marketbeat.com, 24. www.nasdaq.com, 25. investor.costco.com, 26. investor.costco.com, 27. www.reuters.com, 28. www.fool.com, 29. www.investing.com, 30. www.tipranks.com, 31. www.barrons.com, 32. www.investing.com, 33. investor.costco.com, 34. www.investing.com, 35. www.barrons.com, 36. www.fool.com, 37. www.tipranks.com
