Clorox Has 'Cleared the Deck.' Why the Stock Is a Buy at These Levels. | CLX Message Board Posts


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Msg  28 of 30  at  2/7/2022 5:18:43 PM  by

jerrykrause


Clorox Has 'Cleared the Deck.' Why the Stock Is a Buy at These Levels.

Clorox Has 'Cleared the Deck.' Why the Stock Is a Buy at These Levels.
 
 

Clorox stock had erased its pandemic-era gains last week after the maker of disinfectant wipes and other cleaning products reported second-quarter earnings that missed analysts' expectations . Now Citi analysts think the stock is a buy at this level.

In a research note on Monday, analyst Wendy Nicholson lowered her price target on Clorox (ticker: CLX) to $160 from $194 but maintained a Buy rating on the shares.

Nicholson said that while she knew that the quarter would be challenging, she was "very much disappointed" by the magnitude of miss, despite sales actually being better than expected.

However, with now lower fiscal 2022 guidance , and management indicating that a recovery to prepandemic levels will be a multiyear endeavor, Clorox "has effectively cleared the deck and rebased expectations," Nicholson said.

The near term will likely be choppy. Clorox stock was down 14% on Friday and is now trading at just a 15% premium to the S&P 500 compared with its historical average 35% premium. But Nicholson sees the valuation as undemanding.

"Clorox has multiple long term sales growth levers and can over time recover margins, and in the meantime has one of the best balance sheets in the group," Nicholson says.

Demand for cleaning and sanitization products will be structurally higher in a postpandemic world, Nicholson says, and Clorox's opportunity to expand internationally and in out-of-home partnerships both have long runways. She cites the company's recent addition of Alaska Air Group (ALK) to its multiyear partnerships, as encouraging.

"Although we are taking our medicine now, we think the stock is a Buy at these levels," she wrote.

 


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