On Thursday, financial services firm Jefferies adjusted its outlook on Clorox (NYSE:CLX) shares, increasing the price target to $174 from the previous $151. The firm maintained its Hold rating on the stock.
The change follows a recent meeting with the company's management, where it was confirmed that Clorox is poised to achieve its organic sales growth target of 3-5% in fiscal year 2025 (F25), with expectations to continue growing at that rate thereafter.
The company's management indicated that despite a weaker consumer environment, the behavior of category peers and retailers remains rational. Clorox also anticipates a return to 44% gross margins, with potential for further improvement post-F25.
The management's confidence is bolstered by the on-schedule progress of their Enterprise Resource Planning (ERP) investment, which is expected to roll out in the fourth quarter in the United States.
Jefferies' updated price target reflects a more optimistic view of Clorox's potential, citing the company's clear path to delivering on its sales growth guidance and margin expansion. The firm's analyst underscored the significance of the rational market environment and the company's strategic investments as key factors supporting this positive adjustment.
In summary, Jefferies has raised its price target on Clorox to $174, up from $151, while maintaining a Hold rating on the stock. This revision is based on the company's strong growth prospects, margin recovery potential, and the successful advancement of its ERP system, which is slated for a near-term launch in the U.S. market.
In other recent news, Clorox reported its fourth-quarter earnings for fiscal year 2024, marking the seventh consecutive quarter of margin expansion despite challenges from a cyberattack.
The company expects to overcome the profit and loss detriments of the cyberattack with conservative guidance on top-line growth and gross margins. Clorox aims for 20-25% sales growth in the first quarter of the fiscal year and plans to return to pre-pandemic gross margins.
Citi recently raised the price target for Clorox shares to $165 from $145, maintaining a neutral stance. The firm anticipates a favorable outlook leading into Clorox's first-quarter fiscal year 2025 earnings, with expectations that the company will soon be cycling out of the negative effects of the cyberattack.
CloroxPro, a branch of the company, expanded its Clorox EcoClean line with the introduction of plant-based Disinfecting Wipes. These eco-friendly wipes are designed to combat 99.9% of germs, including common cold, flu viruses, norovirus, and COVID-19. The expansion of the EcoClean line aligns with various sustainability standards and is a step towards the company's sustainability goals.
InvestingPro Insights
Following the positive outlook from Jefferies, Clorox (NYSE:CLX) presents a compelling case for investors, supported by InvestingPro data and insights. The company's commitment to growth is reflected in its consistent dividend history, having raised its dividend for 47 consecutive years, a testament to its financial health and management's confidence in future performance. Additionally, analysts are optimistic, with 6 analysts revising their earnings upwards for the upcoming period, hinting at a robust business outlook.
InvestingPro data reveals a mixed financial picture. Clorox's market cap stands at $20.37 billion, with a high Price/Earnings (P/E) ratio of 73.05, which may suggest a premium valuation. However, the adjusted P/E ratio for the last twelve months as of Q4 2024 drops to 34.15, indicating a more favorable earnings outlook relative to its current valuation. The company's gross profit margin remains strong at 43.21%, showcasing its ability to maintain profitability despite revenue declines of 4.01% over the last twelve months as of Q4 2024.
For investors seeking additional insights, InvestingPro offers more tips, including Clorox's moderate level of debt and its trading status near its 52-week high, which may influence investment decisions. Investors can explore further exclusive metrics and tips on Clorox by visiting InvestingPro at https://www.investing.com/pro/CLX, where 15 additional InvestingPro Tips are available to help guide investment strategies.
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