04:22 PM EDT, 07/11/2024 (MT Newswires) -- Costco Wholesale's ( COST ) positive June sales might be "overshadowed" by the fee increase in its stock movement, UBS said in a note Thursday.

However, the brokerage believes the fee increase actually supports the company's model of investing and subsidizing the proceeds from such increases in high-quality merchandise. Also, the timing and magnitude of the increase had already been a long-time coming for the market.

Effective Sept. 1, Costco will raise annual membership fees between $5 and $10 for members in the US and Canada, which will affect around 52 million memberships, with slightly over 50% being high-paying members, the investment firm said.

Excluding price investments, the fee increase is estimated to boost EPS by $0.32 in fiscal 2025, and culminate an estimated $1 increase over the next two years, UBS analysts added.

Historically, Costco has seen minimal declines in retention rates post-fee increases and the majority of members are expected to maintain their memberships, UBS said.

UBS had a buy rating and $940 price target for Costco. The company's shares were down nearly 4% in recent trading.

Price: 847.40, Change: +0.81, Percent Change: +0.10