Clorox stock is getting wiped out
In other words, people aren’t obsessively wiping everything down now that Covid-19 cases are falling. Clorox’s market value has taken a hit as a result.
Shares are down more than 10% this year, making Clorox one of the worst performers in the S&P 500. The stock has fallen about 25% from its pandemic peak price last summer. Sales and earnings are expected to be flat in 2022.
But it’s not going to get better for Clorox any time soon. The company has been warning investors to not expect growth to return to the levels of the spring and summer of 2020, when concerns about Covid-19 infections were peaking.
“During the height of the pandemic, we were growing at 20-plus percent. We believe long term, we’ll be growing 3% to 5%,” said Clorox chief financial officer Kevin Jacobsen in virtual remarks at a Deutsche Bank global consumer conference earlier this month.
“So we’ve got to work through this period of moderation in demand,” Jacobsen added.
Many Wall Street analysts are concerned. Five have Clorox rated a “sell” and eight have “hold” recommendations on the stock. Only four rate Clorox as a “buy,” according to Refinitiv.
One of those Clorox bears, Kevin Grom of UBS, initiated coverage on Clorox earlier this month with a “sell” rating.
The title of his report was paraphrased from Bruce Springsteen’s 1984 hit: :”Glory Days, They’ll Pass You By.” His price target on Clorox is $166, about 8% below where it’s currently trading
Grom noted that although market share “in some cleaning categories has stabilized of late as supply chain pressure has eased…it is still down substantially when looking at a multiyear period.”
“Some of the key players that did not have the same level of supply chain issues … may have greater staying power,” Grom wrote.
But others think Clorox has a chance to grow beyond its core namesake cleaning products.
“Clorox was the poster child for the Covid lockdown. But there is an opportunity beyond wipes,” said John Boylan, senior equity analyst with Edward Jones.
Boylan noted that Clorox also owns Glad trash bags as well as some other well-known consumer brands, most notably Fresh Step cat litter and the Hidden Valley Ranch line of salad dressings.
Still, Boylan conceded that Clorox will face tougher sales comparisons as demand for wipes wanes. That’s one of the reasons he has a “hold” rating on the stock instead of a “buy.”
