Costco Wholesale (COST) is expected to demonstrate the strength and durability of its business model in its upcoming fiscal Q4 earnings, UBS Securities said.

Costco is slated to report its fiscal Q4 financial results on Sept. 24.

Investors have concerns about the company's slightly decelerating comparable sales, the potential for increased price competition, and slowing membership growth. However, the market is focusing too much on near-term fluctuations rather than the business' structural strengths, the analysts said in a Wednesday note.

The company continues to gain market share, generate improving returns on capital, and boost profitability, while its membership ecosystem remains "one of the strongest in retail," the analysts said. They added that many of Costco's growth opportunities are still underpenetrated.

UBS estimates fiscal Q4 earnings of $6.69 per share, above the $6.55 consensus estimate.

Costco's long-term earnings power is intact, with the risks that are likely to prove transitory increasingly reflected in the stock price, according to the note.

UBS kept its $1,275 price target on the company's stock, with a buy rating.

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