Costco Wholesale Corp. shares fell approximately 2% on Monday following the retailer’s decision not to announce a special dividend. This move disappointed investors accustomed to periodic one-time payouts, which Costco had issued in 2023, 2020, 2017, and 2015. The market reaction occurred despite the company reporting strong quarterly results and positive guidance.
Compounding the pressure, Roth Capital Partners downgraded Costco’s rating to "Sell." The firm also lowered its price target from $906 to $769.
Roth Capital cited concerns over deteriorating fundamentals, including fading renewal rates, slowing member growth, and decelerating traffic. This downgrade came despite the company’s recent first-quarter earnings beat. Analysts warned that given Costco's high valuation, even minor performance misses could trigger a significant re-rating of the stock.