Goldman Sachs Resumes Coverage on Discount Retailers (COST, TGT, WMT)

On Monday, Goldman Sachs announced that it has resumed coverage on several discount retail giants.

The firm resumed coverage of Costco Wholesale Corporation (COST) with a “Neutral” rating and a $124 price target. This price target suggests an 8% increase from the stock’s current price of $114.35.

Target Corporation (TGT) has been given a “Neutral” rating and $71 price target, which suggests an 11% upside from the stock’s current price of $63.29.

Analysts have put a “Buy” rating on Wal-Mart Stores, Inc. (WMT) with a price target of $83. This price target suggests a 12% rise from the stock’s current price of $72.99.

An analyst from the firm commented: “We approach this space with our eyes wide open about the notion of a price-transparent world and the inevitable ascent of ecommerce, with a preference for firms that offer customers value, execute with a lean cost structure, and are shielded from Amazon (Nasdaq: AMZN) growth.”

“We believe that Wal-Mart offers a solid foundation and a modest but durable growth profile that is undervalued by the market. We appreciate its value proposition and cost structure, and believe that its rural store base mitigates the threat from ecommerce incursions.”

Regarding Costco, he said, “We believe COST offers the best business model of the discounters, but resume coverage with a Neutral rating given our expectation that earnings growth will decelerate in the coming periods,’ added the analyst.

Costco shares were mostly flat during pre-market trading Monday. The stock is up 16% YTD.

Target shares were mostly flat during pre-market trading Monday. The stock is up 7% YTD.

Wal-Mart shares were up 36 cents, or 0.50%, during pre-market trading Monday. The stock is up 6% YTD.

The Bottom Line

Shares of Costco Wholesale Corporation (