By Liz Moyer
Investing.com -- Hershey Co (NYSE:HSY) is positioned to sustain better revenue growth than packaged food peers but its shares are fully valued, according to Morgan Stanley.
Morgan Stanley rates Hershey shares as Equal Weight with a price target of $246. Shares traded up 0.6% on Monday and are up 5.6% so far this year. The price target implies a small amount of upside.
The candy and snack maker is heading into its first investor day in five years, the analysts said, adding that Hershey “is well positioned to sustain topline growth ahead of packaged food peers beyond 2023.” They see the company raising its long-term topline growth algorithm to 3% to 5% from 2% to 4%.
Topline growth has accelerated in the past two years, the analysts said. That has been supported by “stronger confectionery volumes, robust pricing, and a successful salty snacks strategy, driving 10% organic sales growth on average in 2021-22, and our outlook for 8.5% organic sales growth in 2023.”
The analysts also wrote in their note that Hershey’s work to expand capacity by 15% from 2020 to 2024 and increase its media spending “position it to capitalize on its growth potential. As capacity comes online and supply chain conditions continue to improve, HSY can step up its innovation efforts.”
Morgan Stanley says the North America chocolate category is about $27 billion at retail and has grown at a 3.5% 10-year compound annual growth rate.