Goldman Sachs has sharply revised its position on candy maker Hershey: it has abandoned its advice to sell its shares and recommended to buy them. According to the bank's analysts, the confectionery giant's securities now look like an attractive combination of risk and return. The impact of costs is already reflected in quotations, the market share of the company is growing, and the range and novelties are steadily finding demand from buyers. Goldman emphasized that Hershey's strong brands and ability to keep prices high make it one of the most resilient players in the industry.

Details

Goldman Sachs upgraded its rating on Hershey shares from "sell" immediately to "buy", noting that the securities look very attractive, CNBC writes. The bank also raised its target price on the stock from $170 to $222, suggesting it is up 19.4% from its last close on Sept. 15.

At the auction on September 16, quotations of the company jumped by 3.8%, since the beginning of the year its market value has increased by more than 13%.

What drivers does Goldman see?

The investment bank attributed the upgrade to Hershey's "attractive risk-return profile" after a series of downgrades to the company's own forecasts last year, Investing.com wrote. Goldman Sachs said cost pressures, including rising cocoa prices as well as the impact of duties, have already been largely factored into investor expectations, and the company's market share has started to grow.

Goldman estimates that Hershey's recent decisions to raise prices will help drive a significant profit increase in fiscal 2026. The company told retailers in July that it intends to raise prices for products in its confectionery portfolio by an average double-digit percentage, attributing the increase to rising ingredient costs, primarily cocoa. Hershey emphasized that the measure is not related to duties or trade policy. Cocoa prices have risen sharply over the past two years and hit a record in December due to supply problems in Ghana and Cote d'Ivoire. Earlier, Hershey CEO Michelle Buck said the manufacturer was adapting package sizes and prices, especially on seasonal products, to offset rising costs. The company's "historically strong pricing power" based on its iconic brand portfolio was a key factor in the forecast revision, Goldman explained.

"We believe Hershey initially took a cautious approach to lock in the effect of the new prices, so part of the current moves are more of a catch-up adjustment relative to competitors," said Goldman Sachs analyst Leah Jordan, adding that sweets are an "affordable luxury" category that has shown resilience in different economic conditions. She was quoted by SeekingAlpha as saying.

"Hershey remains one of the least vulnerable packaged product manufacturers to competition from retailers' private label products as their share of the confectionery segment as a whole remains low," Jordan said.

Referring to Google search trend data for Hershey's top ten brands, she emphasized that interest has steadily increased year after year. This shows that the company's products, including its new developments, remain in demand among customers.

What are other analysts saying?

On the previous day, September 15, BNP Paribas upgraded Hershey from a "neutral" rating to an "above market" rating, which is also equivalent to a buy recommendation, and set a target price of $210 per share. This implies a potential upside of 13%.

At the same time, last week Piper Sandler reaffirmed its advice to sell Hershey securities (Underweight rating). The investment bank raised the target from $160 to $167, but the new benchmark is 11% lower than the current quotations. Analysts noted that the revision is due to the cancellation of Canadian retaliatory trade fees, which ceased to operate on September 1. They accounted for about a quarter of the company's total duty burden - about $100 million per quarter.

Overall, Wall Street's attitude toward Hershey is cautious: of the 26 analysts covering the stock, 16 recommend holding it (Hold rating). Five are optimistic and advise to buy the company's securities (Buy and Overweight ratings), and also five advise to sell them (Underweight and Sell).

Context

In late July, Hershey reported strong results for the second quarter of 2025 that beat Wall Street forecasts. Earnings per share came in at $1.2 versus expectations of $0.99, and revenue reached $2.6 billion - while the consensus was $2.5 billion.

This article was AI-translated and verified by a human editor

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