Citi Reiterates Hold Rating on Costco (COST)

Citing an increasingly competitive environment, Citigroup Global Markets reiterated its Hold rating on Costco Wholesale Corp. (NASDAQ: COST) this morning.

Citi is "impressed with the company's improving MFI growth and robust traffic trends as it cycles strong traffic gains from last year." Citi, however, remains cautious about Costco's near-term prospects. It believes "the competitive environment remains challenging, as demonstrated by the difficulty Costco had in passing food inflation through to the consumer in F3Q10."

Citi, which maintains a $64 price target on Costco, also noted future share repurchase activity. It is "modeling approximately $380 million in share repurchases in F2010 and $1.0 billion in share repurchases in F2011."

Costco Wholesale Corporation operates membership warehouses with a wide range of merchandise categories. Shares closed June 18 at $58.21.