The Ratings Game: Clorox wins praise for ‘execution,’ but one analyst mulls further product price hikes

United States

Clorox Co. stock rose more than 4% in premarket trades Friday after the bleach maker powered past Wall Street estimates for earnings and revenue.

JPMorgan analyst Andrea Teixeira reiterated an underweight rating on Clorox CLX, -2.36% and lifted her price target by $ 2 to $ 137 a share.

“We give management a lot of credit for the improvement in execution and margin inflection,” Teixeira said in a Friday research note. “Yet we think it is prudent to assume a normalization in price elasticity ahead in light of the fourth price increase that only hit shelves recently, in particular in categories that have substantial private label penetration such as bleach, litter, trash bags and surface cleaning.”

Clorox said its second-quarter profit rose to $ 99 million, or 80 cents a share, from $ 69 million, or 56 cents a share, in the year-ago quarter. Adjusted earnings totaled 98 cents a share.

Wall Street analysts expected Clorox to earn 66 cents a share, according to estimates compiled by FactSet.

Net sales rose to $ 1.72 billion from $ 1.69 billion and beat analyst expectations of $ 1.66 billion.

CEO Linda Rendle said Clorox delivered better-than-expected results, “with strong execution and the benefit of continued brand relevance as well as our ongoing pricing and cost savings efforts.”

The company currently faces macroeconomic challenges with plans to “return to more consistent profitable growth over time,” Rendle said.

For full-year 2023, Clorox is projecting adjusted earnings of $ 4.05 to $ 4.30 a share, compared to its earlier forecast of $ 3.85 to $ 4.22 a share.

Analysts currently expect Clorox to earn $ 4.12 a share for the year.

As of Thursday’s close, Clorox stock is up 0.5% in 2023, compared to a rise of 8.9% by the S&P 500.