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Clorox Shines Amid Covid-19 But Still Gets a Downgrade

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If there's one company that has literally and proverbially cleaned up through the insanity that is the coronavirus pandemic, it is certainly Clorox  (CLX)

Yet the disinfectant products maker on Thursday received a surprising downgrade from analysts at Credit Suisse. 

The reason: While Credit Suisse, like most others, expect the company to continue outperforming amid the coronavirus pandemic, it also see the stock at current levels as fairly valued.

“Our prior numbers included a more severe flu season, but not a boost from a viral pandemic,” analyst Kaumil Gajrawala said in a research note unveiling their downgrade to neutral from outperformance.

Indeed, 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, Gajrawala noted that Clorox is now trading at 31-times forward earnings.

Gajrawala said his team now expects full-year per-share earnings of $6.51 for Clorox, 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, 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.

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