Clorox lowered its full year 2021 adjusted earnings per share outlook on Friday. Shares of Clorox (CLX) were under pressure on Monday after Wells Fargo analyst Chris Carey double downgraded the stock to Underweight, a sell-equivalent rating, following quarterly results that were released at the end of last week. The analyst argued that Clorox offers "dead money at best" and that estimates "need a significant reset." Meanwhile, several other Wall Street analysts also lowered their price targets on the shares. 

RESULTS

On Friday, Clorox reported third quarter adjusted earnings per share of $1.62 and revenue of $1.78B, with consensus at $1.48 and $1.87B, respectively. Additionally, the company cut its full year 2021 adjusted earnings per share view to $7.45-$7.65 from $8.05-$8.25, while backing its full year 2021 revenue view of up 10%-13%. Earnings per share guidance excludes the $2.11 loss from the noncash impairment related to the VMS business and the 60c one-time noncash gain from the Saudi JV acquisition valuation remeasurement, Clorox noted.

In an appearance on CNBC Friday, CEO Linda Rendle said that Clorox is considering raising shelf prices and other measures to combat inflationary costs.

'DEAD MONEY AT BEST'

Following the company's quarterly results, Wells Fargo analyst Chris Carey double downgraded Clorox to Underweight from Overweight with a price target of $170, down from $240. Clorox offers "dead money at best, with downside," Carey told investors in a research note. The analyst noted that the quarter fell short on sales and the company's pricing plans are "muted," which means estimates "need a significant reset." Carey believes a potentially disappointing fiscal 2022 outlook that is well below Street expectations may be "on the horizon."

'LOW QUALITY' QUARTER

Keeping an Underweight rating on the shares, Morgan Stanley analyst Dara Mohsenian lowered the firm's price target on Clorox to $170 from $183. The analyst argued that the company's "low quality" third quarter results and fourth quarter guidance that implies material negative earnings per share revisions support his previously-held thesis that consensus earnings per share forecasts are "materially too high" for full year 2022 and beyond as Clorox cycles higher COVID-driven demand and faces gross margin pressure from rising commodity costs.

Credit Suisse analyst Kaumil Gajrawala also lowered his price target on Clorox to $185 from $205 but kept a Neutral rating on the shares. The analyst highlighted that Clorox reported organic sales down 1% in the third quarter versus expectations of up 5%. Lower shipments of cleaning and disinfecting products, as well as supply constraints on wipes, drove the miss, Gajrawala added, pointing out that limited mobility is still a drag on Burt's Bees, but driving at-home consumption of charcoal, cat litter, and trash bags.

Meanwhile, Deutsche Bank analyst Steve Powers lowered the firm's price target on Clorox to $186 from $195, keeping a Hold rating on the shares. The company reported a "disappointing" quarter Friday in terms of the top-line results, owing to weaker sales in its Health and Wellness segment, Powers told investors in a research note of his own.

PRICE ACTION

In afternoon trading, shares of Clorox dropped about 1% to $181.16.