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Jefferies upgrades Clorox stock, cites strategic market exits

EditorEmilio Ghigini
Published 03/26/2024, 06:24 PM
© Reuters.

On Tuesday, Jefferies upgraded Clorox (NYSE:CLX) stock from Underperform to Hold, setting a price target of $145.00. The shift in rating comes as Clorox makes strategic exits from Argentina, Uruguay, and Paraguay, which collectively contributed 2% to its sales. This move is seen as a long-term benefit for the company, allowing it to concentrate on markets with clearer visibility.

The analyst noted that Clorox's decision to withdraw from these markets should have a minimal effect on its financial numbers. The company's recent cyber-related challenges are largely resolved, and with the current business trajectory considered mostly back on track, the potential for further stock depreciation appears limited.

Additionally, the analyst adjusted the earnings per share (EPS) estimate for the current quarter downward, attributing the change to the uneven nature of the restocking cycle and its connection to fourth-quarter shelf space resets in stores. Despite this adjustment, the overall outlook for Clorox remains positive due to the company's strategic refocusing efforts.

Clorox's stock rating adjustment and the new price target are significant indicators for investors, signaling a shift in the company's market performance expectations. As Clorox continues to streamline its operations, the market will be watching to see how these changes impact its financial outcomes in the coming quarters.

InvestingPro Insights

Clorox (NYSE:CLX) has demonstrated a commitment to rewarding shareholders, as evidenced by its impressive track record of raising dividends for 47 consecutive years, a testament to its financial discipline and operational efficiency. This is particularly notable given the company's strategic exits from certain South American markets, which aligns with its focus on maintaining a robust dividend policy. Additionally, analysts anticipate that Clorox will continue to be profitable, with net income expected to grow this year, offering a positive signal for investors considering the stock's future performance.

With a market capitalization of $18.68 billion and a Price/Earnings (P/E) ratio of 39.02, based on the last twelve months as of Q2 2024, Clorox is trading at a premium compared to industry peers. The company's revenue has seen a growth of 3.47% over the same period, indicating a steady upward trajectory in its financials. Moreover, the dividend yield stands at 3.19%, which may appeal to income-focused investors.

InvestingPro Tips highlight that while Clorox operates with a moderate level of debt, it is trading at a high Price/Book multiple, which could warrant caution for value investors. The company's short-term obligations exceeding liquid assets may also be a point of concern for those closely monitoring liquidity and financial health. For investors seeking deeper analysis and additional insights, InvestingPro offers more tips, including analyst revisions and earnings multiples. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and uncover the full range of InvestingPro Tips available for Clorox.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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