UPDATE: UBS Starts Clorox (CLX) at Sell
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UBS analyst Peter Grom initiates coverage on Clorox (NYSE: CLX) with a Sell rating and a price target of $16.00.
The analyst comments "The debate for CLX centers on whether habits formed during COVID-19 will lead to accelerated category growth for the company's portfolio, particularly across cleaning and health/wellness segments. We partnered with the UBS New Analytic Approaches Team to try and handicap this potential. Many categories are still seeing elevated purchase levels, but overall there also appears to be a downward trend back to predicted growth had COVID not happened, suggesting less "stickiness" longer-term. We see lower category growth and price elasticity impacts on volume (FY22-23e org growth -60-80bps vs. St) plus margin headwinds from necessary reinvestment to rightsize share (FY22-23e OPM -20-30bps vs. St) driving downside to Street FY22-FY23 EPS (UBSe -5% to -6% vs. St). The next catalysts are: 1) CLX's F4Q earnings in July/Aug where it will give FY22 guidance and 2) market share performance in Nielsen data over the next few months as comps start to normalize and price increases are implemented."
Shares of Clorox closed at $174.58 yesterday.
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