Costco gas stations’ lower prices could boost its business as cash-strapped consumers confront surging energy prices, according to analysts at Gordon Haskett. The research firm found that traffic at Costco gas stations in the first two weeks of March — after the U.S.-Iran war began and oil prices soared — climbed from February. Analysts led by Chuck Grom believe that’s because of Costco’s low prices. COST YTD mountain COST year-to-date chart. “Our historical pricing studies dating back to 2014 indicates Costco gas prices typically run at a $0.09 discount vs. the top five local competitors and a $0.24 discount vs. the state average — a value gap that is likely to come into greater focus should the current price environment prove sustainable,” Grom wrote in a report Friday. Traffic at Costco’s gas stations in March is already up 7.9% year-over-year, the analyst added. In the last six months, traffic growth was only positive in November, when it rose 1.9%. The bull case for Costco comes not just from its gas stations, but the demographics of its customers too. “Costco remains relatively insulated from broad consumer pressures due to its resilient higher-income customer cohort,” Grom wrote. The company’s “best-in-class value proposition becomes increasingly relevant” at times of economic uncertainty, he added. Gordon Haskett reiterated its buy rating on Costco and its 12-month price target of $1,200, which implies a 23% gain from Thursday’s close. Costco was flat in premarket trading, and since the war in the Middle East began is off 3.5%.
