Investor Alert

Jan. 26, 2022, 1:54 p.m. EST

Clorox downgraded as COVID-driven growth slows

Clorox Co. (NYS:CLX) shares fell 4.2% in Wednesday trading after the consumer cleaning products company was downgraded to underperform from neutral at Credit Suisse based on concern that the skyrocketing growth from early in the pandemic has started to wane. Analysts maintained their $160 target price. Sales for fiscal year ending June 2021 reached $7.34 billion, up from $6.72 billion for the fiscal year ending June 2020. Sales for the fiscal first quarter fell to $1.81 billion from $1.92 billion the previous year. "Nearly two years into the pandemic, Clorox is a larger company that can grow faster," the note said. "If consumption continues to revert toward pre-pandemic levels, $500 million in company sales may still be at risk." Analysts also highlight pricing uncertainty and the impact on margins. "If consumption weakens further amid high input cost inflation, a drop in volumes could result in material deleverage to margins," the note said. Clorox is scheduled to report fiscal second-quarter results on Feb. 3, according to a FactSet calendar. Clorox stock has tumbled 21.7% over the past year while the S&P 500 index (S&P:SPX) has gained nearly 15%.

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