Hersey Whets Morgan Stanley's Sweet Tooth

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Valentines Day is around the corner and Hersey HSY has been slowly pushing higher since mid August 2014. The fundamental story remains strong on a relative basis against it’s peers. Morgan Stanley analyst Matthew Grainger remains Equal-weight on Hersey and expects the company’s EDITDA valuation (less than 1.0x) to “offer flexibility to consider accretive M&A” alongside the possibility of share repurchases.
Grainger defends Hersey’s balance sheet strength by citing the “incremental dairy deflation” during the past quarter and increases his 2015 EPS estimate from $4.42 to $4.45 despite FX headwinds.
Four things Morgan Stanley says to watch for are:

  1. Progress of MarkTen national rollout,
  2. Potential options for monetization of SABMiller stake,
  3. Cost and pricing optionality surrounding quota buyout expiration,
  4. 2015 outlook and guidance.

Hersey shares traded down 0.12 percent mid-way through the morning session to $109.20.

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Posted In: Analyst ColorAnalyst Ratings
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