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Will Hershey Stock Rise on 1Q17 Results?

PART:
1 2 3 4 5 6
Part 5
Will Hershey Stock Rise on 1Q17 Results? PART 5 OF 6

Why Analysts Are Neutral on Hershey Stock

Ratings summary and target price

As you can see in the graph below, 19 Wall Street analysts cover Hershey (HSY) stock. They’ve rated Hershey stock a 2.8 on a scale of one (strong buy) to five (strong sell). About 21.0% of the analysts have recommended a “buy” for the stock, 68.0% have recommended a “hold,” and 11.0% have rated it a “sell.”

On April 17, 2017, Hershey was trading at $108.70 per share, which is about 3.0% below analysts’ 12-month price target of $112.10.

Why Analysts Are Neutral on Hershey Stock

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Why a “hold” rating?

Hershey’s strong portfolio of renowned brands, efficient marketing, in-store merchandising and display, demand-driven innovative product offerings, productivity, and cost savings are likely to foster investors’ confidence in the stock.

However, Hershey operates in an industry that is witnessing sluggish demand due to the shift in consumer consumption trends towards wholesome foods. Plus, slow growth in the domestic market, macroeconomic challenges in key international markets, increased competition, a strong dollar, and deflationary pressures on margins are taking a toll on the company’s performance.

Recent analyst activity

On February 28, 2017, Société Générale upgraded its rating for Hershey from a “sell” to a “hold.” Credit Suisse also raised its price target to $110.0 from $96.00. Meanwhile, on February 16, Argus upgraded its rating for Hershey from a “hold” to a “buy.”

Peer comparison

Of the 20 analysts covering Mondelēz (MDLZ), 70.0% have recommended a “buy” for the stock, and 30.0% of them have recommended a “hold.” Of the 17 analysts covering Kellogg (K), 10.0% have rated the stock a “buy,” 74.0% have rated it a “hold,” and 16.0% have rated it a “sell.”

Of the 14 analysts covering Campbell Soup (CPB), 7.0% have rated the stock a “buy,” 57.0% have rated it a “hold,” and 36.0% have rated it a “sell.” Hershey constitutes 0.9% of the Consumer Staples Select Sector SPDR ETF (XLP).

We’ll discuss Hershey’s valuation in the last part of this series.

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