Bank of America has reinstated its coverage of Costco (COST) with a Buy rating and a $1,185 price target, stating that the warehouse giant still has 20 percent upside from here. The bank's decision comes before the company's scheduled earnings, which have already outperformed the S&P 500 by 15 points this year. The analyst, Robert Ohmes, argues that Costco's membership machine is strong, producing $5.2 billion in annual fee revenue at margins close to 90 percent. He also highlights the company’s strong renewal rates and aggressive pricing strategy. Costco's first-quarter earnings were $4.50 per share ahead of the Street expected, with revenue growing 8.2 percent to $65.98 billion and U.S. comparable sales up 5.9 percent excluding gas. The company also raised its executive membership to $130 from $120, and its primary membership price from $65 from $60, the first hike since 2017, and this increase could add about $800 million to earnings over the next two years. However, the real test will be in April, when the company drops second-quarter results, when it drops to $2.30 per share.