J.P. Morgan Still Sweet On Hershey

According to J.P. Morgan, Hershey HSY shares have largely treaded water since the announcement on May 19 of the pending departure of CEO Dave West. J.P. Morgan said that it recently attended the annual confection show in Chicago, and had opportunity to speak at length with Hershey managers. “While interim CEO J.P. Bilbrey remains somewhat unknown, we see ample positives to reaffirm our enthusiasm for the HSY shares. Hershey's premium to the peer group is now 12%, versus the 20% level of years past. Its 2012E EV/EBITDA multiple of 9.9x is scarcely above the peer group average of 9.7x, and essentially in line with peers such as Kellogg and Heinz. We are reiterating our $65 price target, implying 18% stock gains for the balance of the year. Our price target is based on 21x our 2012 EPS estimate of $3.10, a number that could prove conservative.” Hershey closed yesterday at $55.25.