Retail exchange traded funds were in the red Wednesday along with Costco (NasdaqGS: COST) after the warehouse club operator reported quarterly net income that fell short of analyst estimates after a charge.
Costco shares “have had a good run of late and are enjoying a healthy multiple, so we could see a modest pullback and we would be buyers,” Jefferies analysts said.
Other Wall Street analysts expressed concern over profit margins that could be pressured by rising inflation.
“Not to throw cold water on the latest from Costco by any means as the performance overall was solid, but the fact is the market yearned for more,” Wall Street Strategies said in a report.
Peter Wahlstrom at Morningstar said Costco shares are trading below his fair value estimate so he is waiting for a further pullback for a more attractive entry point.