Clorox Cut to Neutral by Credit Suisse on Valuation

Clorox gets downgraded by Credit Suisse, which expects the company to continue outperforming amid the Covid-19 pandemic but also sees the stock as fairly valued.

Disinfectant products maker Clorox  (CLX) - Get Report on Thursday received a downgrade from analysts at Credit Suisse, which like most others expect the company to continue outperforming amid the coronavirus pandemic but also see the stock at current levels as fairly valued.

In a note to clients, Credit Suisse's Kaumil Gajrawala said analysts were downgrading Clorox to neutral from outperformance on what they see as “elevated valuation” levels.

While one-third of Clorox’s sales come from current high-demand items including cleaning products including disinfecting wipes, bleach, bathroom and multi-purpose cleaners, the analyst noted that Clorox has outperformed the S&P 500 by more than 45 basis points, and is now trading at 31-times forward earnings.

“Our prior numbers included a more severe flu season, but not a boost from a viral pandemic,” Gajrawala said, noting that they now expect full-year per-share earnings of $6.51, above current consensus estimates of between $6.25.

Meanwhile, analysts at J.P. Morgan are keeping their overweight rating on Clorox stock.

In a separate note on Thursday, analysts Andrea Teixeira and Peter Grom noted that beyond the near-term benefit from the Covid-19 outbreak they were also encouraged by recent discussions with Clorox CEO Benno Dorer on his plans to correct prior distribution losses, cut other costs and boost longer-term growth.

“We believe the CEO call bodes well with our investment thesis and recent upgrade of CLX to overweight,” they said.

Shares of Clorox were down 0.65% at $189.78 on Thursday.

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