UBS Warburg raised Clorox (CLX) to buy; lifted the U.S. household products sector to overweight from sector weight; and upgraded Proctor & Gamble (PG) and Gillette (G) to strong buy.
Analyst Andrew McQuilling says the household products sector has seen meaningful price declines over the past two months; bringing absolute values to compelling levels. He says the positive sector fundamentals are intact.
McQuilling notes volumes are healthy; raw material costs appear benign; competitive pressures remain limited; and the recent Euro/Yen strength is positive. He thinks June results, and the outlook for the remainder of 2002, are most positive for P&G and Gillette.
McQuilling thinks Clorox appears to have an attractive risk/reward ahead of its expected strong June results.