On Wednesday, Piper Sandler reaffirmed a Neutral rating with a $200.00 price target on shares of The Hershey Company (NYSE:NYSE:HSY), following a visit to the company's headquarters. The meeting with CEO Michele Buck and CFO Steve Voskuil underscored Hershey's position as a brand leader with significant pricing power and a robust innovation pipeline. Despite these strengths, the company faces challenges with rising cocoa costs, which have surged approximately 110% in the first quarter of 2024 to date.
Hershey is not planning any immediate pricing actions, opting to wait until the completion of its Enterprise Resource Planning (ERP) system transition later in the year. The company is cautious about the extent of pricing increases, considering consumer tolerance and maintaining a long-term strategy. As a result, any price adjustments in the second half of 2024 are unlikely to fully offset the recent spike in cocoa costs.
The confectionery giant is focusing on innovation across its product range, including new premium flavor variations for its Skinny Pop brand. Despite the near-term cost headwinds, Piper Sandler's outlook for Hershey remains steady, with an estimated earnings per share (EPS) of $9.60 for 2024 and $9.95 for 2025.
The reiterated price target of $200 by Piper Sandler reflects a balance between Hershey's strong brand presence and innovation capabilities against the backdrop of rising input costs and the careful management of pricing strategies. The company's decision to hold off on immediate pricing revisions demonstrates a strategic approach to dealing with the current economic environment while planning for future growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.