Hershey Company (NYSE:HSY, XETRA:HSY) is in focus after Jefferies raised its price target to $205 from $220, while maintaining a 'Hold' rating, as the chocolate maker approaches its first quarter earnings report, due on April 30.
The firm described the upcoming quarter as a turning point as the company moves past the peak impact of cocoa inflation toward a more visible margin recovery later in the year.
The analysts noted that the period is unlikely to be judged primarily on earnings performance, but rather on whether the company can confirm that its recovery trajectory remains intact.
Hershey’s results are still expected to reflect elevated input costs and the lingering effects of higher-priced inventory. However, Jefferies pointed to improving cocoa trends as a key support, writing that recent cost easing “meaningfully improves the profit outlook and reduces the likelihood of further pricing actions.” This dynamic, the firm added, should help clarify the path toward normalization as the year progresses.
On the top line, Jefferies expects North America organic sales growth of about 7% year over year in the first quarter, driven largely by pricing carryover. At the same time, demand elasticity remains a central concern.
Recent data showed confectionery sales growth fueled by double-digit price increases, while volumes declined, underscoring ongoing pressure on consumer demand. The firm noted that innovation will be critical in stabilizing volumes, while the company’s salty snacks segment continues to provide support through scale and distribution gains.
Looking further ahead, Jefferies sees a clearer margin recovery opportunity as Hershey benefits from improved cost visibility and internal productivity efforts. The company’s longer-term earnings framework was described as conservatively set, which analysts view as a deliberate attempt to manage expectations during the recovery phase.
Still, the firm flagged several constraints. Concerns around sustained volume growth in core confectionery categories, leadership transition following the planned departure of a senior US executive, and valuation levels were cited as reasons for caution.
“With shares already reflecting much of the expected earnings normalization, we remain cautious despite an improving fundamental backdrop,” the analysts wrote.
Jefferies now values the stock at roughly 20.5 times its 2027 earnings estimate of $10 per share, concluding that while fundamentals are improving, the risk-reward balance keeps it on the sidelines for now.
Shares of Hershey traded hands at $191 on Thursday afternoon, having added about 5% so far this year.