Hershey stock holds steady as Bernstein reiterates Market Perform rating

Investing.com - Bernstein SocGen Group has reiterated its Market Perform rating and $155.00 price target on Hershey (NYSE:HSY), currently trading at $169.93 with a market cap of $34.4 billion, following the company’s announcement of a CEO transition. According to InvestingPro data, the company maintains a GOOD overall financial health score.

Hershey recently revealed that Wendy’s (NASDAQ:WEN) CEO Kirk Tanner will assume the role of CEO effective August 18, 2025. The appointment comes earlier than expected, as current CEO Michele Buck had previously announced plans to retire in June 2026. The transition comes as Hershey maintains its strong dividend track record, with InvestingPro noting the company has maintained dividend payments for 55 consecutive years, currently yielding 3.22%.

The timing of the transition is notable as Tanner only recently joined Wendy’s in February 2024 after a 30-year career at PepsiCo (NASDAQ:PEP), where he most recently served as CEO of PepsiCo Beverages North America.

Bernstein analysts suggest Tanner, as an outsider entering a company challenged by rising cocoa costs and weak volume trends, might reset earnings expectations below the 6-8% EPS growth algorithm Hershey presented at the CAGNY conference in February. Current consensus estimates project 6% EPS growth next year.

The firm noted that while Tanner did not initially lower earnings expectations when taking over at Wendy’s last year, he later reduced guidance as pressures across the U.S. burger market intensified.

In other recent news, The Hershey Company announced that Kirk Tanner will take over as President and CEO, effective August 18, 2025, succeeding Michele Buck. This leadership change follows Tanner’s departure from Wendy’s, where Ken Cook has been appointed as Interim CEO. Hershey is also facing financial challenges, as Moody’s changed its outlook to negative due to high cocoa prices and tariffs, which are expected to impact earnings significantly in 2025. The company plans to manage these pressures through pricing strategies and operational efficiencies, while also seeking a tariff exemption.

Piper Sandler has maintained an Underweight rating on Hershey, citing tariff impacts and cocoa price inflation as key concerns, and has adjusted its earnings estimates for 2025 and 2026. S&P Global Ratings also revised Hershey’s outlook to negative, highlighting increasing leverage due to high cocoa costs and ongoing acquisitions, including the $750 million acquisition of LesserEvil. Despite these challenges, Hershey’s strong market position and strategic initiatives aim to mitigate financial pressures. The company has a cash reserve of $1.5 billion and access to a $1.35 billion revolving credit facility to support its operations and strategic investments.

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