Cleaning solutions provider Clorox (NYSE:CLX) is struggling to clear the mess created by its recent cyberattack. On October 4, the business warned investors that the temporary stoppage of operations would have a significant financial impact on its first quarter of fiscal 2024. Following the news, CLX stock plunged as much as 6% in after-hours trading yesterday, and it is probable that the slide will continue today when markets start.
Don't Miss Our Christmas Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
In August of this year, Clorox experienced a significant cyberattack that hit a few of its IT operations. This caused the company to take some of its systems offline and resort to manual ordering and processing. Clorox said that this attack hampered its sales in the first quarter of Fiscal 2024, and warned that Q1 sales will post a decline of between 23% and 28%. Moreover, the company will incur a net loss in the quarter instead of the expectation of a profit of roughly $150 million.
More Financial Details of the Impact
Clorox also stated that quarterly organic sales will decline between 21% and 26%, while it had earlier projected mid-single-digit percentage growth. Further, the per-share loss could be anywhere between $0.35 and $0.75, against analysts’ profit expectations of $1.29 per share. The company stated that the IT hack has even impacted its Q2 operations, but to a lesser extent as it tries to get back to its regular operating procedures. CLX shares have lost nearly 18% since the disclosure of the attack.
It is noteworthy that casino giants MGM Resorts (NYSE:MGM) and Caesars Entertainment (NASDAQ:CZR) were the first to undergo a similar attack. They even paid a hefty ransom to rescue their systems from the hackers.
Is CLX Stock a Good Buy?
Recently, D.A. Davidson analyst Linda Bolton Weiser upgraded CLX stock to a Buy rating from a Hold view as it sees the recent 18% pullback in share price as a buying opportunity. The analyst maintained the price target of $152 (15.3% upside) on the stock.
In her research note, the analyst stated that although the shares have retracted since the announcement, they will rise once Clorox discloses the financial impact. Weiser reduced the model estimates for FY24 earnings per share by 15% and FY25 estimates by 10% owing to the hack’s impact.
It is important to highlight here that the analyst’s note was published on October 2, before Clorox disclosed the financial impact, and she may change her view after the disclosure. Other Wall Street analysts do not share Weiser’s fervor and have allotted a Moderate Sell consensus rating to CLX stock. This is based on one Buy, five Holds, and six Sell ratings received in the past three months. Also, the average Clorox price target of $149 implies 13% upside potential from current levels.
