On Thursday, Wells Fargo (NYSE:WFC) adjusted its outlook on Clorox (NYSE:CLX) shares, maintaining an underweight rating but reducing the price target to $135 from $140. The revision reflects a recalibration of expectations for the company's future earnings per share (EPS).
The firm's analyst cited a revised forecast for Clorox's fiscal year 2024 estimated EPS, which has been raised to $5.95 from the previous $5.50 estimate, primarily due to a lower anticipated tax rate. Looking ahead to fiscal year 2025, the analyst projects a slight increase in EPS to $6.47, up from $6.37, attributing this to marginally higher margins in the Health & Wellness segment.
The new stock price target of $135 is based on a 20 times multiple of the projected calendar year 2025 EPS, a reduction from the prior multiple of 21 times. The analyst acknowledges the company's efforts to navigate ongoing challenges such as cybersecurity threats and supply chain disruptions.
The report further elaborates on the evolving landscape of sales and margins for Clorox, suggesting that these areas of debate may lead to a more constrained range of financial performance outcomes. The analyst indicates that this could potentially result in a reemergence of downside risks to EPS.
This update from Wells Fargo arrives as Clorox continues to manage the various volatile factors affecting its business operations. The company's stock performance and future earnings potential remain closely watched by investors and analysts alike.
InvestingPro Insights
As investors digest the latest analyst outlook from Wells Fargo on Clorox, it's worth noting the company's strong track record of dividend reliability, with Clorox having raised its dividend for 47 consecutive years. This is underscored by an InvestingPro Tip that highlights Clorox's ability to maintain dividend payments for 54 consecutive years, indicating a commitment to shareholder returns even in challenging times.
InvestingPro Data shows a current market capitalization of $17.33 billion for Clorox, with a P/E ratio standing at a lofty 73.32. This is adjusted to 29.77 when looking at the last twelve months as of Q3 2024, suggesting a potential normalization of valuation multiples. Meanwhile, the company's revenue growth over the same period is a modest 0.53%, reflecting the competitive and operational challenges the firm faces.
For those seeking additional insights, there are more InvestingPro Tips available for Clorox, including expectations of net income growth this year and several analysts revising their earnings upwards for the upcoming period. To explore these further, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. There are 9 additional tips currently listed, offering a deeper dive into Clorox's financial health and market position.
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