The stock of chocolate maker %HersheyCo (NYSE: $HSY) has been downgraded as rising %Cocoa prices continue to impact the company and its outlook.
Analysts at Wall Street research firm D.A. Davidson have lowered their price target on Hershey’s stock to $149 U.S. from $164 U.S. previously and reiterated a Hold-equivalent “neutral” rating on the shares.
The main reason for the lowered price target is the ongoing impacts of cocoa prices, the active ingredient in chocolate, which continue to rise due to global supply shortages.
The price of cocoa hit a record high on Dec. 18, 2024, of nearly $13,000 U.S. per metric ton. While prices have since come down to $10,500 U.S., they have more than doubled from this time last year.
D.A. Davidson, and other analysts, say elevated cocoa prices continue to cast a dark cloud over chocolate makers such as Hershey, which have been forced to raise prices and risk alienating customers as a result.
Retail analysts have said that consumers will likely pay about 10% to 20% more for chocolate this Valentine’s Day than they did last year due to cocoa costs.
At Hershey, the company has raised the price of a king-size two-pack of Reese’s hearts this Valentine’s Day by 13% to $2.59 U.S.
Those price increase have led several other analysts to also downgrade Hershey’s stock in recent weeks.
%PiperSandler (NYSE: $PIPR) lowered its rating on Hershey’s stock to Sell from Hold and dropped its price target on the stock to $120 U.S. from $153 U.S. previously.
Similarly, %JPMorganChase & Co. (NYSE: $JPM) lowered their price target on shares of Hershey to $151 U.S. from $171 U.S. and set a Hold-equivalent “neutral” rating on the stock.
And Stifel Nicolaus lowered its price target on shares of Hershey to $160 U.S. from $170 U.S. and set a Hold rating on the stock.
The multiple downgrades of Hershey stock come despite the Pennsylvania-based company recently reporting better-than-expected financial results.
On Feb. 6, Hershey reported earnings per share (EPS) of $2.69 U.S., which beat consensus estimates of $2.40 U.S.
The stock of Hershey Co. has declined 16% over the last 12 months to currently trade at $160.81 U.S. per share.
