The stock of Hershey Co. (HSY) has been upgraded by analysts at Citigroup (C) following decent quarterly financial results from the chocolate maker.
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Citigroup lifted its designation on HSY stock to a Hold-equivalent neutral rating, up from a Sell previously. At the same time, the Wall Street bank lowered its price target on the shares to $154 from $159. Citigroup said the higher rating reflects a more balanced risk-reward profile following the company’s guidance for the year ahead, and the lower price target is due largely to high cocoa prices.
HSY stock has fallen 22% over the past six months, making it one of the worst-performing securities that Citigroup covers. However, Citigroup says the worst might now be over for Hershey and that the company could experience growth in 2026.
Record Cocoa Prices
Hershey, which makes Reese’s Peanut Butter Cups and Kit Kat chocolate bars, has struggled over the past few years as the price of cocoa, the active ingredient in chocolate, has hit an all-time high. Poor weather in Africa has wiped out much of the world’s cocoa crop, leading to cocoa prices rising more than 200% throughout 2024 and peaking at an all-time high of $12,987 per metric ton last December.
Hershey CEO Michele Buck recently resigned and the company has rebuffed a takeover offer from rival chocolate maker Mondelez (MDLZ). Citigroup highlighted potential upsides for Hershey that include lower-than-expected price elasticity, additional pricing actions, and a possible retreat in cocoa prices. Citigroup sees room for earnings upside if input costs ease or the company takes price actions.
HSY stock has declined 21% over the last 12 months.
Is HSY Stock a Buy?
The stock of Hershey Co. has a consensus Hold rating among 18 Wall Street analysts. That rating is based on 14 Hold and four Sell recommendations issued in the last three months. The average HSY price target of $153.25 implies 1.22% downside risk from current levels.
