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TD Cowen downgraded the snack maker from a buy to a hold on Friday. This change in rating suggests the firm sees less room for the stock to grow in the near term, even as the average price target across all analysts remains higher at about $188.
While Hershey recently showed signs that its profit margins are starting to recover, this downgrade reflects a more cautious stance on how quickly the company can grow its sales volume. For a long-term owner, it is a reminder that the business is still working to balance higher prices with the need to keep shoppers buying its chocolate and salty snacks.
Source: TD Cowen
After Hershey reported its October results, we updated our fair value and cut our quality score to 3.6. We have added the impact of one-time tariff refunds and the deliberate exit from manufacturing private label snacks to what we track. We also reset our projections for the volume of chocolate the company can sell after customers bought 11% less product following price hikes. Our quality score now reflects a higher rating for how much profit the business makes on its investments, but a lower rating for its protection from competitors and its remaining room to grow.
Hershey's board approved its regular quarterly dividend, keeping the payout at roughly $1.45 per share. Dividends are a way for companies to share a portion of their profits directly with people who own the stock. This move is routine for the company and was expected by the market. It shows that despite recent challenges with high cocoa prices, Hershey still generates enough cash to continue its long history of returning money to its owners.
Source: PRNewsWire
Hershey delivered a strong third quarter with sales reaching about 3.3 billion dollars. While the company is still dealing with high cocoa prices, it managed to grow its reported net income by over 100 percent compared to last year. This suggests the company is successfully using price increases and cost-cutting to protect its profits even as shoppers become more careful with their spending.
Management noted that demand for its snacks is gaining momentum heading into the end of the year. For long-term owners, the key takeaway is that the business is proving it can maintain its earnings power despite the spike in ingredient costs. The stock barely moved on the news, but the results confirm that the core chocolate and snack brands remain healthy.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Hershey is launching a protein powder as it looks for ways to keep customers snacking even as more people use weight-loss drugs like GLP-1s. These drugs often reduce cravings for sugary treats, which poses a long-term risk to the company's core chocolate business.
By moving into protein, Hershey is trying to follow its customers toward healthier habits rather than fighting the trend. This is part of a broader plan to expand beyond the candy aisle and turn Hershey into a more general snacking company that can grow even if chocolate sales slow down.
Source: New York Post
Management consistently sets a bar they can clear, beating analyst targets for eight straight quarters even as they navigate high costs for ingredients like cocoa. This pattern suggests the team has a firm handle on their costs and can be trusted to deliver on the numbers they promise.
| Expectation | |
|---|---|
| EPS | $1.81 |
| Revenue | $3.13B |