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Clorox shares jump as results 'better-than-feared'

Published 11/02/2023, 01:43 PM
Updated 11/02/2023, 01:44 PM
© Reuters.  Clorox (CLX) shares jump as results 'better-than-feared'
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Clorox (NYSE:CLX) shares jumped over 8% Thursday after the company reported earnings for its latest quarter, topping consensus expectations.

The company reported Q1 EPS of $0.49, $0.73 better than the analyst estimate of a loss per share of -$0.24. Revenue for the quarter came in at $1.4 billion versus the consensus estimate of $1.31 billion.

"After entering the fiscal year with solid momentum, the August cyberattack caused wide-scale disruptions that are impacting our short-term financial performance," said CLX CEO Linda Rendle. "Looking forward, our near-term priorities are clear: We are laser-focused on rebuilding customer inventories, preserving merchandising activities, and ultimately rebuilding distribution and market share."

The company sees FY2024 EPS between $4.30 and $4.80, versus the consensus of $4.59, while net sales are now expected to be down mid-to-high single digits compared to the previous expectation of sales that are flat to up 2%.

Reacting to the report, analysts at Evercore ISI maintained an Underperform rating and $120 price target on the stock, stating the results "turned out well above the range outlined in the October 4th warning."

Analysts at Citi upgraded CLX shares to Buy from Neutral, raising the price target to $150 from $135. They said the company is "starting to wipe off the cyberattack impacts."

"CLX delivered better-than-expected F1Q'24 results compared to guidance provided post the August cybersecurity incident, and lowered FY'24 guidance, as expected, to account for the FY impact of the cyberattack, including sales now guided down M-HSD% and EPS expected within $4.30-$4.80, with the mid-point ~11% lower than prior," the analysts said. "Ultimately, we view the cybersecurity issue as a one-time negative impact. With CLX shares down ~30% from early Aug. and the stock trading at ~21x CY24 P/E vs. peers at ~23x, we view valuation as compelling and upgrade CLX to Buy with our $150 PT based on ~24x FY25 P/E."

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Analysts at JPMorgan maintained an Underweight rating and $124 price target on the stock but said the results were better than feared.

"From a sentiment standpoint, we expect investors to view this rebase as a de-risking event, especially given CLX˖s relative underperformance heading into this print (-22% vs. XLP -10% in L3M). We expect CLX shares to positively react to this print, and the comment about shipments exceeding consumption in F2Q signals a step in the right direction," the analysts stated.

Deutsche Bank kept a Hold rating and $136 price target on the stock and acknowledged that the company is building confidence.

"Overall, we expect CLX shares to move favorably as the company delivered 1Q results well ahead of its own pre-announced expectations across sales, gross margins and EPS, accompanied by a better-than-expected updated full-year EPS outlook —broadly pointing to upward revisions in Street (and DB) estimates," the analysts said.

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