Costco Wholesale (COST) remains well-positioned to gain market share on its strong value and steady demand for essentials, though higher fuel prices may pressure near-term margins, Oppenheimer said Tuesday in a report.

Oppenheimer expects fiscal Q3 earnings of $4.75 a share, trailing the Wall Street consensus of $4.98, as higher fuel costs and a heavier e-commerce and pharmacy mix may outweigh a benefit from inventory accounting. Results are due May 28.

The recent jump in gasoline prices is sharper than the increase seen during the early Ukraine-war period, creating a temporary drag on margins, the report said.

Even so, any pullback in shares after the earnings report may present a buying opportunity rather than a sign of weakening fundamentals, the report said.

Oppenheimer raised its price target on Costco stock to $1,160 from $1,100 and maintained its outperform rating as its top pick.

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