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Clorox Drops on Downgrade to Neutral by D.A. Davidson

D.A. Davidson downgrades Clorox on an anticipated sales slowdown as demand may have peaked during the height of the pandemic.

Shares of Clorox  (CLX) - Get Clorox Company Report slipped Thursday after the household supplies producer received a downgrade to neutral from D.A. Davidson on an anticipated sales slowdown as demand may have peaked during the height of the coronavirus pandemic.

Shares of the Oakland, Calif., company fell 3.8% to $182.20 on Thursday.

Clorox has declined 7% for the year and is nearly 25% below the all-time high it reached last year during the worst of the pandemic.

D.A. Davidson analyst Linda Bolton Weiser downgraded Clorox to neutral from buy and lowered her price target on the stock to $189 from $234.

Weiser noted that consensus estimates have been pricing in only a 1.7% decline in sales for March, which may be too optimistic, and comparisons only will get more difficult from then on.

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The analyst wrote that fair value for the stock would be “in the lower half of its historical range.”

For fiscal 2022, Clorox previously said it expects sales to rise by between 5% and 9%, with diluted earnings in the range of $7.70 to $7.95 a share. Both metrics are improvements from the group's summer forecast.

Weiser wrote that there was a risk that Clorox “could fail to raise and might even lower its guidance” when it reports fiscal third-quarter results next month.

Falling revenue and higher input and manufacturing costs led her to cut her fiscal 2022 earnings per share estimate to $8.01 from $8.16, below the $8.21 average analyst estimate.

In February, Clorox posted stronger-than-expected fiscal second-quarter earnings and boosted its full-year profit outlook, as the surge in clean products sales through the coronavirus pandemic continued to support the group's top and bottom line.

The company now expects sales to increase between 10% and 13% in fiscal 2022, up from prior projections of 5% to 9% growth.