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Investing.com - The risk-to-reward profile around Hershey Co . (NYSE:HSY) has become more "compelling" following a series of guidance cuts by the chocolate maker over the past year, analysts at Goldman Sachs said in a note raising their rating of the firm to "buy" from "sell."
The analysts led by Leah Jordan added that cost pressures around Hershey, particularly from higher cocoa prices and elevated import tariffs, are now "largely known and reflected" in Wall Street expectations.
Executives said they raised prices by around 5% in the quarter ended on June 29 in a bid to counter a spike in cocoa prices, which had contributed to Hershey’s trimming its financial forecasts as recently as last November. Sweeping U.S. levies are also expected to amount to full-year expenses of between $170 million and $180 million.
Meanwhile, the company’s market share trends have improved with "incremental tailwinds" expected to emerge in the second half of this year.
"A core tenet of our prior bear thesis was centered around Hershey’s market share losses within U.S. confection which persisted for most of the past year," the Goldman analysts wrote.
But they added that they are now "more constructive" on the outlook for the firm behind offerings like Reese’s peanut butter cups and Twizzlers candies, citing an increased share of the "seasonal, sweets and mints" segment, "supported by shelf space gains and a step-up in innovation and marketing."
They argued that Hershey’s "iconic brands with strong pricing power should drive outsized earnings per share growth in the 2026 fiscal year."
Shares of Pennsylvania-based Hershey have risen by more than 14% so far this year.
In July, the firm announced better-than-anticipated second-quarter sales and income, thanks in large part to solid demand during the Easter holiday and earlier shipments of seasonal Halloween orders. It also reaffirmed its annual forecast.