Oppenheimer Reiterates Outperform Rating on Clorox (CLX)

Oppenheimer is out with a research report this morning, where it reiterates its Outperform rating on Clorox CLX: it has a price target of $70.00 on the stock, down from $75.00. The Oppenheimer analysts cited the company's recently reported quarterly earnings results, which were disappointing due to U.S. category softness. The company also reduced its FY 2011 EPS guidance, although much of the reduction was due to the previously announced sale of its Auto Care business. Despite all the negative news, the analysts believe that the issues negatively impacting CLX are largely temporary rather than structural. As for valuation, the analysts remarked, “We derive our 12- to 18-month target price of $70 through our five-year discounted cash flow valuation, using a weighted average cost of capital (WACC) of 8.6% and a 2.50% residual growth rate of our terminal (fiscal 2015) unlevered free cash flow estimate of $825 million.”