Hershey reinstated with a Neutral at BofA

BofA reinstated coverage of Hershey (HSY) with a Neutral rating and $180 price target after Bloomberg reported merger talks with Mondelez (MDLZ) have broken down and the latter announcing a quarterly dividend and updated its share repurchase authorization. The firm understands that Mondelez’s actions were being considered well before press reports about a potential Hershey acquisition broke and are normal course of business board decisions. However, Mondelez’s press release strongly emphasized reiteration of capital allocation priorities, which was designed to reduce acquisition anticipation, the analyst tells investors in a research note. BofA expects Hershey’s share price now to resume being driven by fundamentals with cocoa inflation “currently center stage.” That said, press reports related to a possible merger over the past two days do serve as a reminder that Hershey holds strategic value, it adds.