Hershey stock price target cut to $164 at DA Davidson

On Friday, DA Davidson made a revision to its price target on Hershey shares, reducing it from the previous $187.00 to a new target of $164.00. Currently trading at $152.14, near its 52-week low, Hershey stock has declined about 22% over the past six months. According to InvestingPro data, five analysts have recently revised their earnings estimates downward. The firm has decided to maintain a Neutral rating on the stock. The adjustment follows concerns over various challenges facing the company, including uncertainties in the cocoa market, as well as both cyclical and potential secular pressures.

Brian Holland, an analyst at DA Davidson, cited several factors for the continued Neutral stance on Hershey. Among them are the incursion of private label products and retailer inventory management, which represent cyclical challenges. Additionally, there may be secular headwinds such as the impact of GLP-1 on the demand for indulgent products. Despite these challenges, Hershey maintains strong fundamentals with an overall "GOOD" Financial Health Score from InvestingPro, and has maintained dividend payments for 54 consecutive years, currently yielding 3.6%.

Holland pointed out that Hershey’s stock appears to be factoring in a low double-digit decline in EBITDA for the fiscal year 2025, which aligns with DA Davidson’s projection of a 15% decrease. The analyst suggests that the buy side might have an even lower expectation. Based on these assessments, Holland expressed the view that the risk/reward balance for Hershey does not present a compelling case for a more positive outlook.

The revised price target and the analyst’s commentary reflect a cautious approach towards Hershey’s future financial performance. The firm’s analysis indicates that current market conditions and industry trends could pose significant challenges to the company’s profitability in the coming years.

Hershey, known for its confectionery products, will have to navigate these identified issues while attempting to sustain its business performance. The DA Davidson report provides investors with a perspective on the potential financial trajectory of Hershey as it deals with both immediate and long-term market dynamics.

In other recent news, Hershey is grappling with significant challenges due to elevated cocoa costs. Financial firms Piper Sandler and Deutsche Bank (ETR:DBKGn) have downgraded Hershey shares and adjusted the price target to $120 and $148 respectively. The downgrades are primarily due to concerns that high cocoa prices will persist, potentially impacting the company’s earnings per share (EPS) in the coming years.

Simultaneously, Hershey is seeking regulatory approval to purchase over 90,000 metric tons of cocoa, a substantial increase from current limits, in response to global cocoa shortages and escalating prices. The company is also undergoing a leadership transition, with CEO Michele Buck set to retire in June 2026.

Moreover, Swiss chocolate maker Barry Callebaut reported a decrease in sales volume, leading to a negative watch for U.S. and European chocolate companies, including Hershey. These recent developments underline the challenges Hershey is facing, as noted by analysts from Deutsche Bank, Piper Sandler, and Citi.

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