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Deutsche Bank upgrades Costco to buy, says club business model will outperform in uncertain economy

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Costco makes sense for investors and consumers during a time of economic turmoil, according to Deutsche Bank. Analyst Krisztina Katai upgraded the retail stock to buy from hold, saying in a note to clients that Costco appears poised to outperform its peers. “COST is one of the most consistent operators in our group, and its steady traffic gains and high membership renewal rates serve as key differentiators in an increasingly uncertain backdrop,” Katai wrote. Costco’s annual membership fee sets it apart from many other retail and grocery chains, giving it another source of revenue. In an interview with CNBC’s ” Squawk on the Street ” on Monday, Costco CEO Craig Jelinek said that hiking the membership fee was ” not on the table .” With the fee stable, investors can use Costco to help offset the impact of inflation, according to Deutsche Bank. “We see meaningful share gains ahead for COST as consumers increasingly flock to warehouse clubs to consolidate trips, purchase in bulk for better pricing, and fill up their cars with lower priced gas,” Katai wrote. Deutsche Bank hiked its price target for Costco to $579 per share from $525. The new target is more than 17% above where the stock closed on Wednesday. The stock is down 13% year to date. — CNBC’s Michael Bloom contributed to this report.

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