On Monday, Clorox Co . (NYSE:CLX) received a Sell rating from TD Cowen, accompanied by a stock price target of $122. The initiation of the coverage is based on concerns regarding the company's recovery from a cyberattack that occurred last year and its high exposure to private label competition.
The slow recovery from the cyberattack has raised questions about the strength of Clorox's brands. This incident, coupled with the company's significant exposure to competition from private label products, has prompted the Sell rating.
TD Cowen also suggests that Clorox may need to adjust its long-term growth expectations. The firm points to an overestimation of the long-term stickiness of the consumer and professional cleaning habits that were adopted during the pandemic.
The price target of $122 set by TD Cowen reflects these concerns and suggests a cautious outlook on the company's stock performance. Clorox's current strategies and market conditions will continue to be closely monitored by investors following this new Sell rating.
In other recent news, Clorox has been the subject of various analyst revisions and recently released its third-quarter fiscal year 2024 earnings. Wells Fargo (NYSE:WFC) maintained an underweight rating on Clorox shares but reduced the price target to $135.
This adjustment was attributed to a recalibration of expectations for Clorox's future earnings per share (EPS), with a revised forecast for the fiscal year 2024 estimated EPS raised to $5.95.
Simultaneously, Jefferies increased its price target on Clorox to $147, maintaining a Buy rating. The firm noted Clorox's recovery from a cyber incident and anticipated a more stable fiscal year 2025. However, Citi retained a Neutral rating but reduced the stock price target to $150, following observations of Clorox's slowed top-line recovery in the third fiscal quarter.
The company's third-quarter earnings met its adjusted EPS expectations, signaling confidence in its strategic and financial objectives. Clorox anticipates a return to volume growth and normalization of merchandising levels by the fourth quarter, with nearly 90% of the lost market share recaptured. The company also expects top-line growth, margin expansion, and earnings growth in fiscal year 2025. These are the recent developments for Clorox.
InvestingPro Insights
The recent Sell rating on Clorox Co. by TD Cowen, citing concerns over cyberattack recovery and competition, paints a challenging picture for the company. In light of these concerns, it is worth noting some positive aspects reflected in Clorox's financial metrics and market performance.
According to InvestingPro data, Clorox has a market capitalization of approximately $16.49 billion, indicating a strong presence in the market. Despite a P/E ratio of 68.27, the adjusted P/E ratio for the last twelve months as of Q3 2024 is significantly lower at 28.37, suggesting a more favorable earnings outlook than the unadjusted figure might imply.
Furthermore, Clorox is expected to maintain its dividend payments, having done so for 54 consecutive years—an InvestingPro Tip that underscores the company's commitment to shareholder returns, even in tough times. Additionally, analysts predict the company will be profitable this year, which could be a sign of resilience amid the challenges highlighted by TD Cowen.
Investors looking for a more comprehensive analysis can find additional InvestingPro Tips for Clorox, offering deeper insights into the company's financial health and market potential. For those interested in exploring these further, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and unlock a total of 10 additional InvestingPro Tips that could help in making more informed investment decisions.
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