Costco Wholesale's (COST) case for outperformance is now "even stronger" in a mixed consumer spending backdrop, Oppenheimer said in a Monday note, as it reinstated the stock to its Top Pick list.

The brokerage said Costco shares have underperformed year-to-date, down about 1% compared with a 16% gain in the S&P 500. Shares now trade at a relative price-to-earnings ratio of 1.89x, in line with the recent historical average of 1.92x and well below the 2.59x peak earlier this year.

Oppenheimer said Costco remains well-positioned for outperformance, citing its superior value proposition, expected share gains, and exposure to a relatively more affluent customer base.

After visiting a Costco location in New Jersey, the analysts said the retailer appears set to sustain momentum in the non-foods category through products such as consumer electronics, gift cards, branded apparel, and appliances.

Oppenheimer kept the company's stock rating at outperform and adjusted the price target to $1,050 from $1,130 to reflect a re-rating in the space.

Price: 915.89, Change: +4.43, Percent Change: +0.49