This Clorox Analyst Believes There Is Downside To Estimates

Clorox Co CLX is scheduled to report its quarterly earnings in early November.

The stock's risk/reward is negative heading into the third-quarter results, according to Goldman Sachs analyst Bonnie Herzog.

The Clorox Thesis: Herzog reiterated a Sell rating for and price target of $132.

The company faces easy year-ago comps and made progress in restoring product availability and market share. As a result, expectations have risen, Herzog said in the note.

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Certain areas remain challenging "due to lack of product availability, heightened competition, purchase cycles and category dynamics." That could require more promotional support.

Recent checks suggest that Clorox's promotions are "well above" the pre-Covid levels in certain categories and the company's two-year trends suggest "a sequential moderation in total sales growth," the analyst stated. "As such, we see an environment of elevated promotions and rising concerns around the health of the consumer to limit the rate of retail inventory pipeline fill, esp. in CLX's Household segment, with some sales likely getting pushed out to FQ2," he further wrote.

There is downside to the current consensus estimates and Clorox's organic sales growth in fiscal 2025 is likely to be back-end loaded, Herzog said.

Price Action: Shares of Clorox had declined by 1.03% to $158.94 at the time of publication on Tuesday.

The company received an upgrade from a Jefferies analyst who predicted an earnings beat.

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