Clorox's (CLX) Q2 results were largely in line with expectations as the company now focuses on driving organic sales growth with newer products in H2 to offset pressure around its fiscal 2026 EPS outlook, Morgan Stanley said in a note Wednesday.

The company reported fiscal Q2 adjusted EPS below consensus, with results benefiting from about 100 basis points of shipment-timing impact, while higher-than-expected supply chain costs weighed on margins, with gross margin about 55 basis points below expectations, the investment firm said.

Clorox reiterated its fiscal 2026 guidance, calling for adjusted EPS at the lower end of its $5.95 to $6.30 outlook range and sales decline of between 6% and 10%.

Looking ahead, Morgan Stanley said management highlighted a pipeline of product launches across trash bags, cat litter and cleaning in fiscal H2.

The firm also noted increased promotional activity in the US and that shipment timing benefits from H1 are expected to reverse in Q3.

Morgan Stanley maintained its equal-weight rating on Clorox and raised its price target to $136 from $125.

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