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Analysts told investors that the stock appears to be discounting the worst, but in their view, prior to a recent cyberattack, the company’s fundamentals were solid.
“CLX is -18% since disclosing on August 14th a crippling cyberattack. On Friday, they said all manufacturing sites are now operating. We believe that when CLX quantifies the financial impacts, uncertainty will be reduced and shares could rally,” they explained.
“We are cutting our estimates to low enough levels (we believe), with a 15% cut to FY24E EPS and, assuming some longer-term share impacts, a 10% cut to FY25E EPS. We are tweaking our target P/E to 27x from 25x (sentiment should improve from here), around the mid-point of the 5-year range of 20x-32x,” the analysts added.
Focusing on the stock’s fundamentals, Weiser said the 25% rally in the first four months of 2023 was driven by several consecutive quarters with upside sales and earnings surprises, while gross margin had been recovering strongly due to price increases that were accompanied by better-than-historical volume demand elasticities.
