Last Update 05 Mar 26

Fair value Increased 18%

HSY: Easing Cocoa Costs And TikTok Push Will Shape Demand Elasticity

Analysts have raised our Hershey fair value estimate from $194.35 to $229.65, reflecting higher Street price targets across multiple firms and updated assumptions for slightly stronger revenue growth, higher profit margins, and a modestly richer future P/E.

Analyst Commentary

Recent Street research on Hershey points to a cluster of higher price targets and, in some cases, rating changes, which feed directly into the updated fair value range. While many firms are more constructive on the shares, there is still a mix of enthusiasm and caution around how much of the opportunity is already reflected in the stock.

Bullish Takeaways

Bullish analysts have raised Hershey price targets by wide dollar increments, including moves of $60, $58, $38, $35, $34, $26, $24, $22, $22, $15, $8, and $3, which supports the higher fair value anchor you see in our updated estimate.
The upgrade to Overweight from Neutral, along with a price target lift to $213 from $193, signals increased confidence that current execution and cost trends can support a higher valuation multiple over time.
Several target hikes cluster around similar periods, suggesting that multiple research teams are revisiting their models in tandem, which tends to reinforce market conviction around revised earnings and margin assumptions.
Comments about easing cocoa costs and the removal of cocoa tariffs point to a more constructive view on Hershey's ability to protect or expand profit margins, which feeds into richer P/E assumptions in analyst models.

Bearish Takeaways

Not all positive target moves come with bullish ratings, as seen in cases where price targets were raised while ratings such as Neutral were maintained. This signals some hesitation about upside from current levels.
The removal from a "Tactical Outperform" list, despite a higher price target, shows that some bearish analysts are cautious about near term execution or valuation, even if they see improved fundamentals in their models.
Incremental price target increases of $3 and $8 stand in contrast to the larger upward revisions, highlighting that a subset of analysts remains more conservative on how far margins or earnings can stretch.
With JPMorgan, Goldman Sachs, and others lifting targets by mid double digit dollar amounts, some cautious voices may worry that expectations for revenue growth, cost relief, and future P/E are becoming harder to exceed. This can limit further re rating potential.

What’s in the News

The Hershey Company issued full year 2026 guidance, with net sales expected to change between 4% and 5%, supported by pricing, new products, seasonal activations, and higher advertising, and reported diluted EPS projected in a range of $7.77 to $8.19 compared with 2025. (Key Developments)
The Board declared quarterly dividends of $1.452 per Common Stock share and $1.320 per Class B Common Stock share, marking the 384th consecutive regular dividend on the Common Stock and the 165th on the Class B Common Stock. The dividends are payable on March 16, 2026, to holders of record on February 17, 2026. (Key Developments)
Hershey recorded goodwill impairment charges of $6,403,000 for the fourth quarter ended December 31, 2025. (Key Developments)
The company outlined plans to boost its marketing budget and work with TikTok influencers, signaling a push to reach consumers through social media channels. (Periodicals, Wall Street Journal report)
Hershey highlighted an expanded seasonal product lineup, including new Jolly Rancher Gummies Fruity Mix and various Easter themed offerings across Reese’s, Cadbury, Hershey’s Kisses, KIT KAT and non chocolate assortments. (Key Developments)

Valuation Changes

Fair Value: The updated estimate has risen from $194.35 to $229.65, a move of roughly 18% that aligns with higher Street price targets.
Discount Rate: The discount rate has edged up slightly from 6.956% to 6.978%, a modest change that has only a small effect on the valuation model.
Revenue Growth: The long term revenue growth assumption has shifted from 3.19% to 3.28%, reflecting a slightly stronger outlook for top line expansion in the model.
Net Profit Margin: The profit margin input has moved from 14.74% to 16.48%, a sizeable step up that plays a key role in supporting the higher fair value estimate.
Future P/E: The future P/E multiple has increased from 25.94x to 26.75x, indicating a modestly richer valuation assumption applied to Hershey earnings in the forecast period.

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Key Takeaways

Strategic diversification into new snack categories alongside innovations like Reese's could drive market share gains and incremental revenue growth.
Mitigating tariff impacts through productivity and pricing strategies may stabilize or improve net margins and earnings.
High cocoa prices and a challenging competitive landscape threaten Hershey's margins, revenue growth, and market position amidst a weaker consumer environment.

Catalysts

About Hershey

Engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The Hershey Company is actively focusing on mitigating the impact of tariffs, particularly those related to cocoa and Canadian imports, through productivity enhancements, pricing strategies, sourcing adjustments, and manufacturing changes. This could help stabilize or improve net margins and earnings if tariffs are reduced or successfully mitigated.
A stronger focus on price pack architecture and demand shaping, especially within less cocoa-intensive product lines, could optimize revenue growth and margin preservation, aiding in sophisticated revenue growth management.
Hershey’s innovation pipeline, particularly with the upcoming significant Reese's innovation, is poised to drive incremental market share gains and increased sales, promising revenue growth and potentially improving earnings given successful execution.
The company is investing in its chocolate processing capacity, aiming for more agility and better management of supply chains, which should provide long-term revenue growth through increased production and efficiency improvements, positively impacting net margins.
Hershey's expansion into sweets and better-for-you snacks categories alongside salty snacks with new acquisitions indicates strategic diversification beyond just chocolate, poised to capture additional market share and drive incremental revenue growth, potentially improving profitability in the long term.

Hershey Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Hershey's revenue will grow by 4.3% annually over the next 3 years.
Analysts assume that profit margins will shrink from 15.3% today to 14.4% in 3 years time.
Analysts expect earnings to reach $1.8 billion (and earnings per share of $8.29) by about July 2028, up from $1.6 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $2.2 billion in earnings, and the most bearish expecting $1.3 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 23.3x on those 2028 earnings, up from 22.9x today. This future PE is greater than the current PE for the US Food industry at 19.6x.
Analysts expect the number of shares outstanding to grow by 0.16% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

Hershey Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Uncertainties around tariff exemptions could lead to additional costs of up to $100 million per quarter in Q3 and Q4 if mitigation efforts are not successful, potentially impacting earnings.
Expected declines in EPS, with guidance for the first half of 2025 projecting a 30% decrease, and potential for further declines in the second half, impacting overall earnings.
High cocoa prices continue to exert pressure on margins and may necessitate further cost management strategies, impacting gross margins.
The weaker consumer environment and value-seeking behaviors could affect revenue growth, especially in snacking and confections.
The competitive landscape remains challenging, particularly with new and smaller players gaining shelf space and market share, potentially affecting revenue and market position.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $166.87 for Hershey based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $211.0, and the most bearish reporting a price target of just $123.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $12.2 billion, earnings will come to $1.8 billion, and it would be trading on a PE ratio of 23.3x, assuming you use a discount rate of 6.4%.
Given the current share price of $186.23, the analyst price target of $166.87 is 11.6% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Tariff Mitigation And New Reese's Product Will Create Opportunity