JPMorgan cuts Clorox stock price target to $144 from $151

On Tuesday, JPMorgan analyst Andrea Teixeira revised the price target for Clorox (NYSE:CLX) shares to $144.00, down from the previous $151.00, while maintaining a Neutral rating. The adjustment follows Clorox’s third fiscal quarter results for 2025, which revealed a miss in organic sales growth and adjusted earnings per share expectations. Currently trading at $138.39 with a market capitalization of $17.05 billion, InvestingPro data shows the stock is slightly undervalued based on its Fair Value analysis. Notably, 10 analysts have recently revised their earnings estimates downward for the upcoming period. Clorox management has also reduced the high end of their fiscal year 2025 sales guidance.

The lowered sales outlook is attributed to a deceleration in consumer demand and retailer destocking. Despite anticipating a temporary 100 basis points increase in pull-forward benefits in the fourth quarter, which is expected to reverse in the first half of fiscal year 2026, the company’s revised guidance suggests organic sales growth of 4% to 8% for the fourth quarter, including 7% to 11% in expected ERP shipments. Without the pull-forward, Clorox estimates organic sales growth to be approximately 2% for fiscal year 2025, implying a decline of around 3% for the fourth quarter. With current revenue at $7.17 billion and a high P/E ratio of 37.7, InvestingPro subscribers can access detailed financial health metrics and 8 additional ProTips to better understand the company’s valuation and growth prospects.

Clorox’s management has expressed confidence in maintaining market share, household penetration, and a strong presence in consumer-favored channels, including Walmart (NYSE:WMT), Costco (NASDAQ:COST), and online platforms, with limited exposure to drugstores. The company maintains a strong dividend track record, having raised dividends for 48 consecutive years, with a current yield of 3.53%. Despite these factors and Clorox’s attractive valuation, JPMorgan’s stance remains cautious. The firm’s reservations stem from several concerns: flat underlying consumption at the end of the third quarter with expectations of a low single-digit decline in the fourth quarter, the anticipated reversal of pull-forward benefits in early fiscal year 2026, ongoing high promotions in certain categories such as Glad, and consumer trends towards value-seeking behavior that may negatively impact price mix in the short to medium term. InvestingPro’s comprehensive analysis rates Clorox’s overall financial health as "GOOD," providing investors with deeper insights through its detailed Pro Research Report.

Additionally, while Clorox’s exposure to tariffs is relatively low due to its limited presence in Canada and Mexico and production close to consumption points, the company still faces an estimated gross tariff headwind of $100 million. However, only a $10 million to $20 million impact from this is expected in the fourth quarter. This compares to higher tariff impacts on other companies in the industry, such as $190 million for Church & Dwight (UW-rated), $300 million for Kimberly-Clark (NYSE:KMB) (UW-rated), $200 million for Colgate-Palmolive (NYSE:CL) (U.S./China but currently on pause, OW-rated), and between $1 billion and $1.5 billion for Procter & Gamble (OW-rated).

In other recent news, Clorox Company reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $1.45, which missed the forecasted $1.57. The company’s revenue also fell short of expectations, coming in at $1.67 billion against a forecast of $1.73 billion. Analysts from Evercore ISI and Goldman Sachs responded to these results by adjusting their price targets for Clorox. Evercore ISI lowered its target from $150 to $140, maintaining an Underperform rating, while Goldman Sachs reduced its target from $138 to $134, keeping a Sell rating. Both firms cited Clorox’s earnings miss and declining sales as reasons for their revised outlooks.

Despite the downturn in sales, Clorox experienced a year-over-year gross margin expansion of approximately 240 basis points, reaching 44.6%, mainly due to cost-saving measures. However, higher-than-expected operating expenses led to the earnings miss. Clorox management has revised its full-year 2025 organic sales growth forecast to a range of 4-5%, down from the previously projected 4-7%, while maintaining its EPS growth guidance between 13% and 19%. Additionally, Clorox anticipates an increase in shipments as retailers prepare for the company’s upcoming enterprise resource planning (ERP) system transition, which is expected to boost organic sales by 2-3 percentage points in the near term.

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