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Hershey: Analysts Recommendations and Valuations

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Rating and target price summary

On July 19, 2017, the majority of Wall Street analysts covering Hershey (HSY) maintained a neutral outlook on the stock. Analysts kept a consensus rating of 2.8 on Hershey stock on a scale of 1.0 (representing a “strong buy”) to 5.0 (denoting a “strong sell”). Of the 19 analysts covering Hershey stock, 21.0% recommended a “buy,” 68.0% kept a “hold” recommendation, and 11.0% maintained a “sell” rating.

Hershey stock is currently trading 5.0% below the analysts’ 12-month target price of $111.44.

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Peer comparison

Analysts maintained a positive outlook on Mondelēz International (MDLZ) stock, given the company’s double-digit EPS growth forecast for the current year. The company’s wellness products are gaining traction, which has lifted investor sentiment. Of the 22 analysts covering Mondelēz, 73.0% rated it a “buy,” and 27.0% recommended a “hold.”

As for Kraft Heinz (KHC), 74.0% of the 19 analysts covering the stock recommended a “buy,” and 26.0% kept a “hold” rating. On the contrary, the majority of analysts remained neutral on Kellogg (K) stock. Of the 21 analysts covering Kellogg stock, 14.0% recommended a “buy,” 72.0% rated it a “hold,” and 14.0% maintained a “sell” rating.

Valuation summary

Hershey stock was trading at a 12-month forward PE (price-to-earnings) multiple of 21.5x on July 19, 2017. The stock is trading higher than the S&P 500 Index’s (SPX) and the Consumer Staples Select Sector SPDR ETF’s (XLP) forward PE multiples of 18.2x and 21.2x, respectively.

Hershey’s current valuation is higher than the peer group average of 19.0x. On July 19, Mondelēz, Kellogg, Kraft Heinz, and Campbell Soup were trading at forward PE multiples of 20.3x, 17.0x, 22.8x, and 16.6x, respectively.

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