Hershey’s Stock Struggles Amid Rising Costs and Market Pressures
Confectionery Giant Faces Setbacks Despite Strong Brand Portfolio
The Hershey Company (HSY), based in Hershey, Pennsylvania, produces and sells a wide range of candy and kitchen items. With a market cap of $37.1 billion, Hershey’s core items include chocolate and sugar candies, chewing gum, mints, and various pantry staples such as baking supplies and drinks.
Falling squarely into the “large-cap stock” category, Hershey showcases significant market presence, highlighted by its major brands including Hershey’s, Reese’s, and Kit Kat. Dominating the U.S. chocolate market with a 45% share, Hershey possesses considerable pricing power that enables it to maintain a competitive edge.
However, HSY has experienced a notable decline, down 15.9% from its 52-week peak of $211.92 on May 14. The stock dropped 11.3% in the last three months, lagging behind the S&P 500 Index’s ($SPX) increase of 7.8% in the same period.
Looking at a broader timeline, HSY shares are down 4.4% year-to-date (YTD) and have slipped 1.9% over the past year, notably underperforming the SPX which recorded YTD gains of 27.3% and yearly returns of 28.7%.
The bearish trend is reinforced by HSY trading below its 50-day and 200-day moving averages since late September, displaying ongoing volatility.
Several factors contribute to HSY’s difficulties, including rising cocoa prices and a decline in consumer interest in staple goods. In addition, Wall Street worries about the impact of new weight loss drugs on the demand for sweets and snacks have compounded the company’s issues.
#On Nov. 7, HSY shares fell over 2% following the release of its Q3 results, where an adjusted EPS of $2.34 fell short of the expected $2.50. The company’s revenue also disappointed, coming in at $3 billion compared to the anticipated $3.1 billion. Hershey projects its full-year adjusted EPS to be between $9 and $9.10.
Moreover, HSY’s competitor, Mondelez International, Inc. (MDLZ), has performed poorly as well, showing a 15.1% decline YTD and 13% closure over the past year.
Wall Street remains cautious about HSY’s future, as reflected in the consensus “Hold” rating from 22 analysts. The average price target of $181.61 indicates a potential upside of only 1.9% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
