Shares of Hershey rose 3.3% on Friday after the chocolate and confectionery products company reported better-than-expected 3Q results and reinstated its 2020 outlook.
Hershey’s (HSY) 3Q earnings jumped 15.5% year-on-year to $1.86 per share and surpassed analysts’ expectations of $1.74. Revenues increased by 4% to $2.22 billion and came ahead of consensus estimates of $2.18 billion.
The company’s CEO Michele Buck said that “confectionery share gains across markets, including an almost 190 basis point gain in the U.S.” He added that “Our core U.S. business remains healthy as consumers reach for small treats during the pandemic, and our decision to lean into Halloween ahead of the season supported consumers’ desire to find new and creative ways to celebrate safely.”
On the back of the strong earnings, Hershey reinstated its 2020 outlook. The company expects 2020 earnings to be in the range of $6.18-$6.24 per share, above the consensus estimates of $6.05 per share. (See HSY stock analysis on TipRanks).
Following 3Q results, Jefferies analyst Robert Dickerson maintained a Hold rating and a price target of $146 (2.3% downside potential). He said that “HSY crushes Q3 fears with 3.8% org. sales growth, topping consensus by 280 bps, driven by a strong N.A. [North America] 5.5% result and a better-than-thought 9.3% int’l decline.” Dickerson added that “2020 guidance implies ~2.5% Q4 org sales growth (vs. 1.3% consensus) and a $1.39-$1.45 EPS range (vs. $1.39 consensus).”
Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 2 Buys and 6 Holds. The average price target of $156.63 implies upside potential of about 4.8% to current levels. Shares are up by 1.7% year-to-date.
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