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On Tuesday, Wells Fargo (NYSE:WFC) analysts, led by Chris Carey, adjusted their outlook on Clorox (NYSE:CLX) shares by reducing the price target from $145.00 to $142.00, while keeping an Equal Weight rating on the stock. The new price target is based on an unchanged multiple of approximately 20 times the projected earnings per share (EPS) of $7.08 for the calendar year 2026, which is a slight decrease from the previous estimate of $7.30 EPS. According to InvestingPro data, Clorox currently trades at a P/E ratio of 37.7x, with analysts maintaining a consensus recommendation of 2.95 out of 5.
Clorox’s performance has shown a decline, with a year-to-date (YTD) drop of 14.8% leading into the company’s financial results announcement. This contrasts with the Consumer Staples Select Sector SPDR Fund (XLP), which has seen an increase of 3.7%, and the broader Household and Personal Care (HPC) sector, which has experienced a less severe decline of 4.3%. According to Wells Fargo, Clorox’s valuation has retreated during this period. Despite market volatility, InvestingPro analysis highlights Clorox’s impressive 48-year streak of consecutive dividend increases, with a current dividend yield of 3.5%.
Despite the current lower valuation, Wells Fargo does not view it as a catalyst for the stock at this time. The analysts believe that the current level of category consumption is not typical and could improve. However, they note that until there is greater clarity on the company’s business model and its top-line growth prospects leading into the fiscal year 2026, the low valuation alone does not appear to be a driving factor for the stock.
The Wells Fargo team’s assessment reflects a cautious stance on Clorox, acknowledging that while there is potential for improvement in consumption patterns, investors may need more substantial data and trends to consider the stock’s valuation as an opportunity. The analysts’ commentary underscores the need for improved visibility into Clorox’s future performance before the stock’s current valuation can be seen as an attractive entry point for investors.
In other recent news, Clorox Company reported its third-quarter earnings for fiscal 2025, revealing both earnings per share (EPS) and revenue figures that fell short of analyst expectations. The company posted an EPS of $1.45, missing the forecasted $1.57, and revenue of $1.67 billion, below the expected $1.73 billion. In response to these results, several financial firms have adjusted their outlooks on Clorox. JPMorgan lowered its price target to $144 from $151, maintaining a Neutral rating, while Evercore ISI cut its target to $140 from $150, keeping an Underperform rating. Goldman Sachs also revised its target to $134 from $138 and retained a Sell rating.
These revisions reflect concerns about Clorox’s sales outlook, which has been impacted by decelerating consumer demand and retailer destocking. The company’s management has adjusted its full-year organic sales growth forecast to 4-5%, down from the previously projected 4-7%. Despite these challenges, Clorox’s gross margin expanded by approximately 240 basis points, reaching 44.6%, largely due to cost-saving measures. However, high operating expenses contributed to the earnings miss. Analysts have expressed caution regarding Clorox’s revised sales guidance, with expectations that retailers might continue to reduce inventory levels amid weaker consumer spending.
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