Cowen raises Hershey stock target to $159, maintains hold rating

On Monday, TD Cowen’s analyst Robert Moskow increased the price target on Hershey shares to $159.00, up from the previous $146.00, while keeping a Hold rating on the stock. Moskow highlighted Hershey’s gross margin guidance for 2025, pointing out the expected significant decline from 500 basis points in the first half to 850 basis points in the second half of the year. This projection is based on Hershey’s cautious stance on pricing in the face of softening U.S. consumer demand for chocolate. According to InvestingPro data, 13 analysts have recently revised their earnings expectations downward for the upcoming period, though the company maintains a solid financial health score of GOOD.

The analyst noted that Hershey’s guidance for 2025 includes pricing growth of only 2-4% in North American Confectionery, which also takes into account lower day-to-day (LDD) pricing on half of the portfolio. Moreover, there has been no price increase so far on instant consumables. Moskow suggested that pricing for the remainder of the chocolate business might effectively decrease after accounting for promotional activities. Despite these pricing challenges, InvestingPro data shows the company maintains strong fundamentals with a P/E ratio of 16.32x and has demonstrated impressive resilience with a 9.49% return over the past week.

Looking ahead, Moskow mentioned that Hershey is likely to encounter another round of double-digit inflation in 2026 due to the timing of their commodity hedges. The management of Hershey has indicated that to achieve earnings per share (EPS) growth in 2026, strategies such as pricing, price pack architecture, and productivity improvements will be crucial. This is particularly pertinent as the higher costs affecting the gross margin in the latter half of 2025 are expected to spill over into the first half of 2026.

Despite the raised price target, the analyst expressed caution regarding the stock’s outlook. The volatility of cocoa prices was cited as a significant factor contributing to the difficulty in forecasting Hershey’s financial outcomes for 2026 and even 2027. This uncertainty surrounding cocoa prices and their impact on Hershey’s future performance underpins the analyst’s cautious stance.

In other recent news, The Hershey Company (NYSE:HSY) has maintained its financial outlook for 2025, anticipating at least a 2% increase in net sales growth. However, the company expects a significant decline in reported earnings per share (EPS) in the high-40% range and adjusted EPS in the mid-30% range. During the Consumer Analyst Group of New York (CAGNY) conference, Hershey’s leadership reaffirmed these projections, highlighting the impact of the acquisition of Sour Strips and foreign currency exchange rates on net sales growth. In related developments, S&P Global Ratings assigned an ’A’ rating to Hershey’s proposed senior unsecured notes, with a stable outlook. The company plans to use the proceeds for general corporate purposes, including debt repayment.

Analyst firms have also weighed in on Hershey’s prospects. UBS adjusted its price target for Hershey to $159 while maintaining a Neutral rating, noting that the company’s earnings guidance for 2025 was not as disappointing as anticipated. DA Davidson also revised its price target to $149, citing uncertainty in the cocoa market as a concern for future financial performance. Despite these challenges, Hershey’s commitment to conservative financial policies and growth strategies has been emphasized by analysts. The company aims to offset high input costs through productivity savings and price increases, although S&P Global Ratings expects a contraction in margins and a potential decline in adjusted EBITDA by over 20% in fiscal 2025.

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