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On Monday, Bernstein SocGen Group adjusted its price target for Hershey shares, reducing it from $177.00 to $146.00 while maintaining a Market Perform rating. The stock, currently trading at $149.25 and near its 52-week low of $147.60, appears undervalued according to InvestingPro’s Fair Value analysis. The revision comes ahead of the company’s earnings report, which is scheduled for next Thursday, February 6, before the market opens. There is a keen interest in the forthcoming guidance on the earnings per share (EPS) for 2025, with Bernstein analysts revising their EPS estimate down from $8.17 to $7.50.
The analysts highlighted several concerns affecting their outlook. Notably, the persistent high costs of cocoa inputs pose a significant question: whether these costs will decrease before Hershey needs to secure hedges for 2026. Despite these challenges, InvestingPro data shows Hershey maintains a GOOD financial health score and has sustained dividend payments for an impressive 54 consecutive years. Additionally, the potential impact of GLP-1 drugs on chocolate consumption is unclear, as their usage is expected to increase.
Company leadership changes are also in focus, with Hershey’s CEO Michele Buck planning to retire in mid-2026. This comes alongside upcoming leadership transitions within the U.S. Confection and Salty Snacks divisions, indicating a period of executive turnover at the company.
Potential catalysts for Hershey’s stock in the coming year include the possibility of new tariffs on cocoa imports into the U.S. or on products manufactured in Mexican plants. Speculation about the company being a buyout target persists, although analysts consider it unlikely. They also suggest the possibility of a partnership with Mondelez (NASDAQ:MDLZ), where the latter could license Hershey’s iconic and highly differentiated brands for sale in certain international markets. For deeper insights into Hershey’s valuation and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 top US stocks.
In other recent news, Hershey is facing significant challenges due to persistent high cocoa costs, with financial firms DA Davidson, Piper Sandler, and Deutsche Bank (ETR:DBKGn) revising their price targets to $164, $120, and $148 respectively. These adjustments reflect concerns that the elevated cocoa prices could potentially impact Hershey’s earnings per share (EPS) in the upcoming years. In response to global cocoa shortages and escalating prices, Hershey is seeking regulatory approval to purchase over 90,000 metric tons of cocoa, a considerable increase from current limits.
Additionally, Hershey is undergoing a leadership transition, with CEO Michele Buck set to retire in June 2026. In the face of these developments, the company’s shares have been put on a negative watch following a reported decrease in sales volume by Swiss chocolate maker, Barry Callebaut. Analysts from Deutsche Bank, Piper Sandler, and Citi have all noted the challenges Hershey is confronting in the current market conditions and industry trends.
Despite these challenges, Hershey maintains strong fundamentals, as demonstrated by its continued dividend payments for 54 consecutive years. However, the company’s future financial performance is being viewed with caution by analysts, given the current industry dynamics and market conditions.
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