Wells Fargo downgraded Club holding Costco (COST) in a rare move Monday, citing "brewing headwinds" to the wholesale retailer's growth momentum.
Wells Fargo also lowered its price target for Costco to $490 a share from $600 a share.
But this year, as life has returned to some level of normalcy for many Americans, Costco's membership-only retail business could see sales come under pressure if demand is softer, Wells Fargo said.
Wells Fargo also cited expected easing in fuel margins at the retailer, which sells gasoline, and potential currency headwinds.
The Club take We think Wells Fargo's analysis on Costco underappreciates the full value of its business model and does not change our view that Costco is a market leader in the retail space.