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On Tuesday, Citi analyst Thomas Palmer updated the price target for Hershey shares, increasing it to $173.00 from the previous $154.00, while maintaining a Neutral rating on the stock. The revision follows Hershey’s recent presentation at the CAGNY Conference, the release of the company’s 10-K report, and a decline in cocoa prices. The stock, currently trading at $177.84, has shown strong momentum with a 9.11% gain over the past week. According to InvestingPro data, 12 analysts have recently revised their earnings estimates downward for the upcoming period, with analyst targets ranging from $120 to $211.34. Palmer’s adjustments to the Hershey model take into account the current cocoa price curve, anticipating that the recent dip will reduce cocoa costs in 2026.
The analyst also noted a potential reduction in pricing needs for Hershey in 2026 due to the lower cocoa costs. Adjustments were made in the model for certain timing items, leading to a slight decrease in the earnings per share (EPS) estimate for 2025 to $6.11 from $6.15, and an increase in the 2026 EPS estimate to $6.95 from $6.77. Palmer justified the use of above-average multiples in the valuation, citing a 24x price-to-earnings (P/E) and a 16x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) on the 2026 estimates. This reflects an improving cost environment and the likelihood that Hershey will raise prices.
Palmer’s statement highlighted the dynamic nature of the situation, implying that while the current estimates reflect a positive outlook regarding costs, the market conditions remain subject to change. Hershey’s updated financial model and the revised price target suggest that the company is in a position to benefit from the current market dynamics, particularly the recent declines in cocoa prices that are an important input cost for the company.
The new price target of $173 indicates a level of confidence in Hershey’s future financial performance, despite the analyst’s neutral stance on the stock. Hershey’s ability to adapt pricing strategies in response to the cost environment is a key factor in the updated valuation. The stock market and Hershey’s investors will likely monitor these developments closely, as input costs and pricing power are critical elements in the company’s profitability and stock performance. InvestingPro analysis shows the company has maintained dividend payments for 55 consecutive years, with a current dividend yield of 3.08%. Based on InvestingPro’s Fair Value model, the stock appears to be trading near its fair value. For deeper insights into Hershey’s valuation and 10+ additional ProTips, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, The Hershey Company (NYSE:HSY) has issued $2 billion in new debt notes, divided into four tranches with varying maturities, as part of a material definitive agreement. This financial move, as per a recent SEC filing, creates a direct financial obligation for Hershey and could be used for refinancing existing debt, funding capital expenditures, or pursuing strategic investments. Additionally, S&P Global Ratings assigned an ’A’ issue-level rating to Hershey’s proposed senior unsecured notes, with the outlook for the company remaining stable. The company plans to use the proceeds for general corporate purposes, including the repayment of certain notes due in 2025.
At the 2025 Consumer Analyst Group of New York conference, Hershey reaffirmed its full-year financial expectations for 2025, projecting at least a 2% increase in net sales growth but a decrease in reported EPS in the high-40% range. TD Cowen raised the price target for Hershey shares to $159, maintaining a Hold rating, while highlighting potential challenges related to pricing and inflation. Analyst Robert Moskow noted that Hershey’s pricing growth in North American Confectionery is expected to be modest, with no price increase on instant consumables. Despite these developments, Hershey is addressing the impact of high cocoa futures prices by implementing productivity savings and price adjustments.
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