Citi lifts Clorox stock target on cyberattack cycling

On Wednesday, Citi raised the price target for Clorox shares (NYSE:CLX) to $165 from $145, maintaining a Neutral stance on the stock. The adjustment comes as Clorox nears the one-year mark since a cyberattack impacted its operations, with expectations that the company will soon be cycling out of the negative effects seen in its financials.

The firm highlighted that Clorox will begin to move past the adverse impacts of the cyberattack, as reflected in the upcoming Nielsen scanner data set to be released on September 3. This data is anticipated to show an improvement in comparisons, with further easing expected in subsequent releases on September 17 and October 1.

Citi also anticipates a favorable outlook leading into Clorox's first-quarter fiscal year 2025 earnings, which are due in early November. The company is expected to overcome the profit and loss detriments of the cyberattack with conservative guidance on top-line growth and gross margins. This conservative stance may provide room for potential upside, with Citi's estimates approximately 1.5% higher for sales and 10% higher for earnings per share compared to consensus.

The firm noted that while there is potential for Clorox's stock to approach the new price target within the next month, the stock has already seen a significant rise, increasing around 17% in the last month. This recent performance is a contributing factor to Citi's decision to maintain a Neutral rating despite the revised price target.

In other recent news, CloroxPro has extended its Clorox EcoClean product line with the launch of plant-based Disinfecting Wipes. These eco-friendly wipes are made from 100% plant-based materials and are designed to combat 99.9% of germs, including common cold, flu viruses, norovirus, and COVID-19.

The company has also reported its fourth-quarter earnings for fiscal year 2024, marking the seventh consecutive quarter of margin expansion despite challenges from a cyber-attack.

Clorox has outlined strategies to navigate anticipated consumer pressures and competitive activity in the fiscal year 2025, including leveraging its robust brand portfolio, increasing advertising, introducing product innovation, and emphasizing value superiority.

The company is aiming for 20-25% sales growth in the first quarter of the fiscal year and plans to return to pre-pandemic gross margins while aligning its sales growth and free cash flow with long-term objectives.

InvestingPro Insights

As Clorox (NYSE:CLX) approaches a financial rebound from last year's cyberattack, InvestingPro data and insights offer a deeper look into the company's current valuation and performance metrics. With a market capitalization of $19.38 billion and a high Price/Earnings (P/E) ratio of 69.2, Clorox is trading at a premium relative to its near-term earnings growth. The adjusted P/E ratio for the last twelve months as of Q4 2024 stands at 32.43, which reflects a more moderate valuation when considering future earnings potential.

InvestingPro Tips highlight that Clorox has a commendable record of raising its dividend for 47 consecutive years, indicating a strong commitment to returning value to shareholders. Furthermore, analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's financial prospects. This aligns with Citi's anticipation of a conservative yet potentially upward-trending guidance for Clorox's Q1 2025 earnings.

For investors seeking more comprehensive analysis, InvestingPro offers additional tips on Clorox's stock performance and valuation metrics. There are 13 more InvestingPro Tips available, which can provide investors with a more nuanced understanding of the stock's investment potential.

With Clorox trading near its 52-week high and showing a strong return over the last three months, investors may find these insights particularly useful for making informed decisions. To explore these tips further, investors can visit the dedicated page for Clorox on InvestingPro.

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