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On Tuesday, Piper Sandler maintained a Neutral stance on Hershey stock, with a price target set at $179.00. The firm's outlook is cautious due to the sustained high prices of cocoa futures, which could pose a risk to the company's performance in 2025. Despite these cost pressures, Piper Sandler has kept its 2024 earnings per share (EPS) estimate for Hershey at $9.53 and the 2025 EPS estimate at $8.88.
The sustained elevation in cocoa futures prices has outlasted initial expectations, which may impact Hershey's cost structure more than previously anticipated. If the current elevated costs persist, there is a potential $0.40 to $0.45 risk to the firm's estimated EPS for 2025. However, Piper Sandler has also factored in additional cost savings for 2025 that could help mitigate some of the financial strain from the higher cocoa costs.
Despite the near-term cost risks, Piper Sandler recognizes the attractiveness of Hershey's product portfolio. The price target of $179.00 is based on approximately 20.0 times the company's projected 2025 earnings. The firm's assessment reflects a balance between the strong aspects of Hershey's business and the current challenges posed by cocoa market conditions.
Hershey shares price target of $179.00 remains unchanged as the firm continues to monitor the impact of cocoa prices on the company's future earnings. The maintained price target and EPS estimates indicate a careful consideration of the risks and savings that could influence Hershey's financials in the coming years.
The financial firm's commentary underscores the importance of cocoa cost trends in assessing the confectioner's financial health, while also acknowledging the potential for cost savings to alleviate some of the pressure. Hershey's position in the market will continue to be watched closely as these cost dynamics unfold.
In other recent news, The Hershey Company (NYSE:HSY) has been under scrutiny due to the surge in cocoa costs, a key ingredient for their products. Analysts have adjusted their guidance numbers for Hershey, with a slight downward revision of the EPS forecast for 2024 from $9.60 to $9.59, and a notable reduction for 2025 from $9.95 to $8.90. Amid these challenges, Hershey announced the passing of board member Robert M. Dutkowsky, a key figure in the company's financial and governance oversight.
In addition, Hershey was among several North American companies that initiated significant workforce reductions at the outset of 2024. Analysts from Citi have maintained a Neutral rating on Hershey shares but increased the price target to $204 from $199.
On the contrary, DA Davidson lowered Hershey's price target from $220 to $204, maintaining a Neutral stance on the stock due to concerns over rising cocoa prices and their impact on the company's earnings for the fiscal year 2025.
These recent developments highlight the company's proactive management of cocoa sourcing and diversified product innovation pipeline, as well as the challenges it faces in maintaining everyday chocolate market share and navigating cocoa price volatility.
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