Clorox’s Struggle in Post-Recovery Market: Underweight Rating and Lowered Price Target

Analyst Christopher Carey of Wells Fargo maintained a Sell rating on Clorox (CLX – Research Report), reducing the price target to $135.00.

Christopher Carey’s rating is based on Clorox’s struggles to regain its market position in what he describes as the “post-recovery reality.” The company has been dealing with various challenges such as the impacts of COVID, inflation, and a cyber-attack, which have prevented it from demonstrating its capabilities under normal market conditions. In the recent quarter, despite positive headlines showing organic sales growth, a deeper analysis reveals issues like negative volume in every US division and a negative price/mix in key segments. Moreover, expectations for the coming fiscal year are on the lower end of the spectrum, suggesting a possible decline in sales.

Carey also points out that Clorox is accelerating its promotional spending to recover volume and shelf presence, which appears to be a new strategy for the company. However, this increased spending is impacting their gross margin, which has declined in the recent quarter. The upcoming fiscal year is crucial for Clorox to demonstrate whether it can achieve shelf wins and improve consumption. Given these challenges and the potential for narrowed earnings beats or even a return to downside risks, Carey has decided to maintain the Underweight rating and reduce the price target for Clorox’s stock.

In another report released today, Barclays also maintained a Sell rating on the stock with a $132.00 price target.

TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.

Clorox (CLX) Company Description:

Founded in 1913, California-based The Clorox Co. manufactures and markets consumer and professional products. It operates through four business segments: Health and Wellness, Household, Lifestyle, and International.