- Wednesday, October 16, 2024
Clorox stock experienced a significant jump on Friday as the company's inventory recovery garnered praise on Wall Street. This recovery follows last year's cyberattack that caused major disruptions.
Deutsche Bank analyst Steve Powers commended the home products company for its resilient inventory rebuild, stating, "We anticipate a strong positive stock reaction to CLX's FY2Q results." Powers raised his price target to $156 from $140 and maintained a Neutral rating on the stock.
In the aftermath of the cyberattack, Clorox faced widespread disruptions that had a short-term impact on its financial results. However, the company announced on Thursday that it now expects adjusted earnings of $5.30 to $5.50 per share for fiscal year 2024, an increase from previous estimates of $4.30 to $4.80 per share. In 2023, Clorox reported earnings of $5.09 per share.
Furthermore, Clorox revised its sales outlook for the year, projecting a low single-digit decline compared to their previous forecast of a mid-to-high single-digit decline.
Chief Executive Linda Rendle expressed optimism about the progress made in rebuilding retailer inventories, stating, "We are ahead of schedule in rebuilding retailer inventories, enabling us to resume merchandising and restore distribution." She acknowledged the challenging environment but emphasized the company's commitment to driving top-line growth and margin recovery.
For the second quarter, Clorox reported earnings of $2.16 per share on revenue of $1.99 billion. This surpassed analysts' expectations of $1.09 per share in earnings on revenue of $1.8 billion, according to FactSet.
Clorox's impressive inventory recovery and stronger-than-anticipated financial outlook have positioned the company for growth, earning the confidence of investors and analysts alike.
Key Takeaways:
- Clorox stock jumps after successful inventory recovery post-cyberattack.
- Deutsche Bank analyst raises price target and maintains Neutral rating on the stock.
- Clorox expects adjusted earnings of $5.30 to $5.50 per share for fiscal year 2024, up from previous estimates.
- Sales outlook revised to a smaller decline than previously projected.
- CEO highlights progress in rebuilding retailer inventories and emphasizes focus on driving growth and margin recovery.
- Second-quarter earnings surpass analysts' expectations.
Barclays Analysts Optimistic About Clorox's Inventory Rebuild
Barclays analyst Lauren Liberman recently expressed optimism regarding Clorox's ability to rebuild inventories faster than expected in most categories. However, Liberman also commented on the company's conservative guidance, which she deemed as a recurring pattern over the past four years, calling it a "Groundhog Day" outlook.
Drawing a parallel to the movie "Groundhog Day" starring Bill Murray, where the protagonist experiences an endless time loop, Liberman hinted at a sense of repetition in Clorox's forecasts. Despite this observation, she expects the company to achieve 2024 earnings of $6.21 per share, surpassing their own projections by 13%. Additionally, Liberman has raised her price target from $118 to $148 while maintaining an Underweight rating on the shares.
BofA Securities analyst Anna Lizzul has also shown confidence in Clorox's potential. Lizzul has raised her price target to $160 from $150, maintaining a Neutral rating. She believes that her current assessment appropriately factors in the benefits from volume recovery and managing challenges in market share following a cybersecurity attack amid a potentially tough consumer market.
As a result of these positive evaluations, Clorox shares surged by 6.1% to $157.13, enjoying their largest percentage increase since November 2023, according to Dow Jones Market Data. In comparison, consumer-products companies Procter & Gamble and Colgate-Palmolive experienced slight declines of 0.3% and 0.8% respectively.
Meanwhile, the S&P 500 demonstrated a 0.3% increase on Friday.
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