Hershey Co HSY deserves credit for its vision and focus on brand investment, pricing, data analytics, and other initiatives that will position it to grow earnings in 2021, according to BMO.
The Hershey Analyst: Kenneth Zaslow upgrades Hershey's stock to Outperform with a price target lifted from $150 to $163.
The Hershey Thesis: Near-term concerns related to lower Halloween-related candy sales are "likely overstated," Zaslow said. Most notably, seasonal sales for Easter exceeded expectations and this could serve as a "proxy for the relative strength" of Halloween. Even if Halloween sales fall short of expectations, it comes at an extremely unusual time and investors will give the company a pass.
Beyond the coming months, Zaslow said Hershey's could introduce new price increases over the next year or so and this represents a sustainable tailwind. The company can leverage its data to price more strategically in the confectionery category that has historically shown favorable pricing power for snack makers.
Hershey has an opportunity to also gain market share in the confectionery category after its share of the U.S. chocolate market hit a multi-year high of 47% in the fiscal second quarter.
The research firm's revised $163 price target is based on 24 times 2021 EPS estimates.
HSY Price Action: Shares of Hershey were trading higher by 1% Tuesday morning at $141.88.
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