Monday, DA Davidson analyst Brian Holland increased the price target on Hershey (NYSE:HSY) shares to $163 from $162, while maintaining a Neutral rating. With the stock currently trading at $165.04 and a P/E ratio of 20.3x, Holland noted that despite the modest increase in the price target, the firm remains neutral on Hershey stock. The analyst highlighted Hershey’s better-than-expected volume, which surpassed the impact of pricing, and in-line margins as evidence that management is effectively handling controllable aspects of the business. According to InvestingPro, the company maintains strong profitability with a 42.6% gross margin.
Holland expressed caution due to ongoing challenges in the market, such as the volatility of cocoa prices and uncertainties surrounding tariffs. According to Holland, these factors have significantly influenced Hershey’s stock direction over the past 18 months and are likely to continue doing so in the near term. InvestingPro data shows the company operates with moderate debt levels and maintains healthy liquidity, with current assets exceeding short-term obligations by a ratio of 1.59.
The updated price target comes as Hershey’s valuation has narrowed in comparison to peers, fueled by investor optimism for the company’s future performance into fiscal year 2026. The company has maintained dividend payments for 55 consecutive years, with a current yield of 3.35%. However, Holland believes that such hopes may be premature given the current market conditions, particularly as 14 analysts have recently revised their earnings expectations downward.
Despite the potential headwinds, Hershey’s recent performance indicates that management is adept at navigating through the uncertainties. The company’s ability to achieve volume growth that offsets pricing challenges is a positive sign, according to Holland.
Investors and market watchers will be keeping a close eye on how Hershey manages the external factors that are out of its control, particularly cocoa price volatility and tariff developments, which are expected to play a significant role in the company’s stock performance in the upcoming period.
In other recent news, Hershey Co reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $2.09, compared to the forecasted $1.97. However, the company fell short on revenue, posting $2.81 billion against a forecast of $2.84 billion, which has raised concerns about future margin pressures. Despite the earnings beat, Stifel analysts maintained a Hold rating on Hershey shares with a price target of $160, reflecting caution over economic pressures such as cocoa inflation and tariffs. Meanwhile, Bernstein SocGen Group increased their price target for Hershey shares from $147 to $155, acknowledging the company’s mixed performance across its product lines.
Hershey’s management has confirmed its guidance for 2025, excluding the impact of tariffs beyond the second quarter, but anticipates a mid-30s percentage decline in EPS for the year due to significant cocoa inflation. The company remains optimistic about achieving EPS growth next year, even with current tariff exposures. Notably, Hershey is planning new product innovations, including a major Reese’s launch in 2024, and is expanding its chocolate processing capacity to enhance supply chain flexibility. These strategic initiatives are expected to bolster market presence and drive future growth.
Analysts have noted contrasting trends within Hershey’s product lines, with segments like salty snacks and seasonal items showing positive momentum, while immediate consumption chocolate items face challenges. Hershey’s management continues to focus on driving EPS growth despite these headwinds, supported by strategic pricing, sourcing, and productivity enhancements. The company is also addressing potential tariff impacts, with estimates suggesting an unmitigated impact of up to $100 million per quarter in Q3 and Q4, primarily from cocoa and Canadian tariffs.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.