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On Friday, Bernstein SocGen Group updated its outlook on Hershey shares (NYSE:HSY), increasing the price target to $155.00 from the previous $147.00 while maintaining a Market Perform rating. The adjustment reflects a detailed analysis of the company’s performance amidst a challenging economic environment, particularly for the U.S. consumer sector. According to InvestingPro data, the stock currently trades at $167.13, with analysis suggesting slight undervaluation based on Fair Value metrics.
In her assessment, Alexia Howard of Bernstein highlighted the contrasting trends within Hershey’s product lines. She noted that while certain segments like salty snacks, seasonal items, and at-home chocolate consumption are showing positive momentum, others are facing difficulties. Specifically, chocolate items intended for immediate consumption and sold in convenience stores are experiencing sustained pressure. With a market capitalization of $33.85 billion and a P/E ratio of 20.59, Hershey maintains a significant market presence despite these challenges.
Despite these challenges, Hershey’s performance in some areas has exceeded management’s expectations. Howard pointed out that U.S. candy, mint, and gum sales were bolstered by a robust Valentine’s Day and the anticipation of Easter. This positive takeaway comes even as North American confectionery organic sales saw a significant decline of 15.2%. The sales drop was attributed to several factors: an 18% volume decline due to the comparison with last year’s retailer inventory increases before the implementation of an Enterprise Resource Planning (ERP) system, the later occurrence of Easter this year, and two fewer shipping days in the quarter. InvestingPro subscribers have access to comprehensive analysis showing that while overall revenue growth remains modest at 0.33%, the company maintains strong profitability metrics and has several additional positive indicators available in the Pro Research Report.
The report by Bernstein offers a nuanced view of Hershey’s current market position. While some product categories are thriving, others are not performing as well, painting a mixed picture of the company’s overall health in the confectionery industry. The updated price target suggests that while Hershey is navigating through some headwinds, there are also areas of resilience within its portfolio. For deeper insights into Hershey’s valuation and growth prospects, including exclusive ProTips and detailed financial analysis, visit InvestingPro.
In other recent news, Hershey Co reported first-quarter 2025 earnings that exceeded expectations, with an earnings per share (EPS) of $2.09 compared to the forecasted $1.97. However, the company fell short on revenue, posting $2.81 billion against a forecast of $2.84 billion. Despite the EPS beat, concerns over the revenue miss and anticipated margin pressures led to a stock decline. Hershey anticipates a challenging second quarter, projecting a decline in gross margin by 700 basis points. The company is optimistic about its path to earnings growth in 2026, driven by strategic initiatives in pricing, sourcing, and productivity enhancements. Upcoming product innovations, particularly in the Reese’s brand, are expected to bolster market presence. Analysts have inquired about the impact of tariffs on cocoa and Canadian imports, with management outlining mitigation strategies through pricing and sourcing adjustments. The company continues to maintain its market share in the confectionery sector, with notable growth in international markets such as Brazil, India, and Mexico.
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