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On Tuesday, Evercore ISI adjusted its financial outlook for Clorox Co . (NYSE: NYSE:CLX), reducing the price target from $150.00 to $140.00 while maintaining an Underperform rating on the stock. According to InvestingPro data, analyst targets for Clorox currently range from $134 to $189, with 10 analysts recently revising their earnings expectations downward. The firm’s analysts cited Clorox’s recent earnings report, which revealed a modest shortfall in sales and earnings compared to expectations. This outcome aligns with the current challenges faced by consumer and retail sectors as previously noted by competitors Procter & Gamble, Kimberly-Clark (NYSE:KMB), and Church & Dwight.
Clorox’s third-quarter earnings per share (EPS) fell short by $0.11, with sales remaining flat, approximately 2% below analyst predictions and the company’s own guidance. The domestic business was primarily responsible for the underperformance, showing a decline of around 3% and lagging behind retail sales by three to four points. The Household segment, which includes charcoal, waste bags, and pet litter, experienced a significant drop of 11%. Management attributed this downturn to retailer destocking, which particularly affected bulkier items.
The timing of sales also played a role in the reported figures. Clorox had advanced the sales of Kingsford products in the previous quarter, and colder weather conditions limited the expected benefits from marketing efforts. InvestingPro data shows the company’s revenue declined by approximately 2% over the last twelve months, though it maintains a healthy gross profit margin of 44.5%. The report suggests that the discussion among investors will likely continue to revolve around Clorox’s potential for sustainable top-line growth. This is in light of the weak end-market growth, which was down 1% in April, and the competitive pressures from value brands like Church & Dwight and Reynolds.
Evercore ISI’s revised price target reflects the need to reassess Clorox’s growth trajectory in the face of these ongoing market challenges and competitive dynamics. The new target represents a more cautious outlook on the company’s financial performance in the near term. Despite these challenges, InvestingPro analysis indicates Clorox has maintained dividend payments for 55 consecutive years, currently yielding 3.5%. However, the stock appears overvalued based on InvestingPro’s Fair Value analysis. Investors seeking deeper insights can access comprehensive valuation metrics and 8 additional ProTips through the full InvestingPro report.
In other recent news, Clorox has reported its first-quarter 2025 earnings, which revealed a shortfall in both earnings per share (EPS) and revenue compared to analyst expectations. The company recorded an EPS of $1.45, missing the forecasted $1.57, and reported revenue of $1.67 billion, which was below the anticipated $1.73 billion. Despite these misses, Clorox experienced a gross margin expansion, reaching approximately 44.6% due to cost-saving measures. However, higher-than-expected operating expenses contributed to the earnings miss.
In response to these results, Goldman Sachs analyst Bonnie Herzog lowered Clorox’s price target from $138 to $134, maintaining a Sell rating on the stock. Clorox’s management has adjusted its full-year 2025 organic sales growth forecast to 4-5%, down from the previous 4-7%, but retained its EPS growth guidance between 13% and 19%. The company also anticipates an increase in shipments as retailers prepare for Clorox’s upcoming enterprise resource planning (ERP) system transition. This transition is expected to boost organic sales by 2-3 percentage points, an increase from the initial estimate of 1-2 points.
These developments come amid a broader trend of weakening consumer sentiment and macroeconomic uncertainties, which have impacted the consumer packaged goods sector. Despite the challenges, Clorox remains focused on premium product innovation and operational efficiency to navigate the current market conditions.
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