Valentines Day is around the corner and Hersey HSY has been slowly pushing higher since mid August 2014. The fundamental story remains strong on a relative basis against it’s peers. Morgan Stanley analyst Matthew Grainger remains Equal-weight on Hersey and expects the company’s EDITDA valuation (less than 1.0x) to “offer flexibility to consider accretive M&A” alongside the possibility of share repurchases.
Grainger defends Hersey’s balance sheet strength by citing the “incremental dairy deflation” during the past quarter and increases his 2015 EPS estimate from $4.42 to $4.45 despite FX headwinds.
Four things Morgan Stanley says to watch for are:
- Progress of MarkTen national rollout,
- Potential options for monetization of SABMiller stake,
- Cost and pricing optionality surrounding quota buyout expiration,
- 2015 outlook and guidance.
Hersey shares traded down 0.12 percent mid-way through the morning session to $109.20.
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