Valued at a market cap of $36.2 billion, The Hershey Company (HSY) is a leading manufacturer of chocolate and non-chocolate confectionery products, as well as a variety of pantry items and snacks. The Hershey, Pennsylvania-based company operates through three segments: North America Confectionery; North America Salty Snacks; and International, with a diverse portfolio of well-known brands.
Shares of the chocolate bar and candy maker have underperformed the broader market over the past 52 weeks. HSY has declined 9.6% over this time frame, while the broader S&P 500 Index ($SPX) has gained 32.3%. In 2024, shares of HSY are down 4%, compared to SPX’s 24.7% increase on a YTD basis.
Narrowing the focus, HSY has also lagged behind the Consumer Staples Select Sector SPDR Fund’s (XLP) 14.5% rise over the past 52 weeks and 12% return on a YTD basis.
Shares of Hershey fell 2.3% on Nov. 7 due to disappointing Q3 2024 results, with weaker-than-expected earnings of $2.34 per share and net sales of around $3 billion. High cocoa prices, lower volumes, and challenges in key segments, including declines in the North America Salty Snacks and International units impacted the company's performance. Additionally, Hershey revised its full-year outlook, projecting flat net sales and a mid-single-digit decline in adjusted EPS, further dampening investor sentiment.
For the current fiscal year, ending in December, analysts expect HSY’s EPS to decline 5.5% year-over-year to $9.06. The company’s earnings surprise history is mixed. It beat the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 22 analysts covering the stock, the consensus rating is a “Hold.” That’s based on one “Strong Buy” rating, 17 “Holds,” one “Moderate Sell,” and three “Strong Sells.”
This configuration is less bullish than three months ago, with three “Strong Buy” ratings on the stock.
On Nov. 11, DA Davidson reduced Hershey's price target to $187 and kept a “Neutral” rating, citing mounting threats to market share. The firm highlighted competition from emerging players and GLP-1 adoption as potential long-term challenges.
The mean price target of $181.95 represents a premium of only 2.8% to HSY’s current levels. The Street-high price target of $222, implies a potential upside of 25.4% from the current price.
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