Goldman Sachs downgrades Clorox: Valuation is ‘unsustainably high’

Goldman Sachs downgraded its rating on Clorox shares to sell from neutral on Wednesday, casting doubt over the company’s ability to perform through the fourth quarter of this year.

“We see unsustainably high relative valuation for Clorox … compounded by” risk to its earnings, Goldman Sachs wrote in a note to investors.

Clorox stock slipped more than 3 percent in trading Wednesday. Shares of Clorox have fallen nearly 8 percent this year as of Tuesday’s close at $135.02 per share.

Goldman Sachs listed several factors for the downgrade, saying Clorox faces a combination of lower sales volume, expectations for diminishing gross profit and challenges in its business in Argentina. Goldman lowered its price target to $112 per share from $127 per share. The new target is 18 percent below Tuesday’s closing price.

“We believe organic sales are likely to decline as volume weakens due to price increases,” the firm said.