Market Overview

Once More Unto The Bleach: Goldman Sachs Downgrades Clorox

Share:
Once More Unto The Bleach: Goldman Sachs Downgrades Clorox
Related CLX
Canopy Growth Is One Of Of Jim Cramer's 'Fantasy Portfolio' Picks
Care Package: Walmart Results, China Trade Talks Might Help Lift Spirits
Clorox declares $0.96 dividend (Seeking Alpha)

Decreased volume and competitive headwinds are likely to interfere with growth for The Clorox Co. (NYSE: CLX), according to Goldman Sachs. 

The Analyst

Analyst Jason English downgraded Clorox from Neutral to Sell and lowered the price target from $127 to $112.

The Thesis

Goldman's lowered valuation projection is based on the company’s intent to remain small and independent, English said in the downgrade note. (See the analyst's track record here.) 

The U.S. marketplace is becoming an exceedingly difficult market to thrive in, and this makes rising above the competition difficult, the analyst said. 

Other headwinds include challenging outlooks on both charcoal — which is steadily declining — and trash bags, due to an expired patent protection that is allowing competitors to recreate the product, English said. 

The analyst said he expects these headwinds to be apparent this year.

Positive changes can be made only if Clorox demonstrates the ability to withstand price increases without experiencing volume declines, according to Goldman Sachs. 

"Our view is predicated in part on an expectation that branded and competitive headwinds will result in a material volume deceleration for the company, and evidence to the contrary would cause us to become more constructive," English said.

"We also expect CLX's categories to realize minimal growth in the U.S., especially in areas such as charcoal, water filters and bleach." 

Price Action

Clorox shares were trading down more than 4 percent to $129.50 at the time of publication Wednesday afternoon. 

Related Links:

With Obstacles To Growth In Sight, Argus Downgrades Clorox

Jefferies: Procter & Gamble Won't Look Much Better Than This

Latest Ratings for CLX

DateFirmActionFromTo
Sep 2018Atlantic EquitiesInitiates Coverage OnNeutral
Jul 2018UBSInitiates Coverage OnSell
Jul 2018Goldman SachsDowngradesNeutralSell

View More Analyst Ratings for CLX
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Jason EnglishAnalyst Color Downgrades Price Target Analyst Ratings Media General Best of Benzinga

 

Related Articles (CLX)

View Comments and Join the Discussion!

4 Reasons To Be Buyers Of Chemours, Courtesy Of RBC

Bank Of Montreal Will Outperform Peers, RBC Capital Markets Says In Upgrade