Hershey earnings beat expectations but cocoa costs weigh on Nasdaq outperformance
Wall Street maintains a Moderate Buy rating with a $217.30 price target, but analysts note that soaring cocoa prices and weaker consumer spending continue to hinder the stock’s ability to track the broader market.
The Hershey Company has significantly underperformed the Nasdaq Composite over the past year, a trend driven by soaring cocoa costs, weaker consumer spending, and stiff competition within the confectionery sector. Despite reporting first-quarter adjusted earnings per share of $2.35, which beat Wall Street expectations of $2.05, the stock has slipped 26.5% from its 52-week high of $239.48 recorded on 2 March.
Revenue also surpassed forecasts, reaching $3.1 billion against a projected $3 billion. However, the company’s market capitalisation of $37.4 billion has not shielded it from broader headwinds. Over the past three months, Hershey shares declined 21.8%, contrasting sharply with the Nasdaq Composite’s 15.8% gains during the same period. Year-to-date, HSY shares have fallen 3.3%, underperforming the Nasdaq’s YTD gains of 11.6%.
Technical indicators suggest a bearish trend, with the stock trading below its 200-day moving average since mid-April and below its 50-day moving average since mid-March. Management expects elevated cocoa prices to continue pressuring margins through fiscal 2026, while executives are closely monitoring consumer sentiment, gas prices, and changes to government assistance that could further impact demand.
Sales volumes have slipped as price-sensitive shoppers in North America cut back on candy. To offset these pressures, Hershey has set its full-year adjusted EPS guidance between $8.20 and $8.52. The company’s principal products, including chocolate, gum, and pantry items, rely on a strong brand portfolio featuring Hershey’s, Reese’s, and Kit Kat, which provides some pricing power but has not yet translated into stock price recovery.
Rival Mondelez International shares lagged Hershey over the past 52 weeks with 6.9% losses, but outperformed Hershey on a YTD basis with a 14.4% uptick. Despite the recent underperformance, Wall Street analysts maintain a consensus Moderate Buy rating for Hershey, with a mean price target of $217.30, suggesting a potential upside of 23.5% from current levels.
