Morgan Stanley Has Questions for Hershey Co. Management Post Q4

In a report published Tuesday, Morgan Stanley analyst Matthew Grainger reiterated an Equal-Weight rating and $105.00 price target on Hershey Co. HSY. In the report, Morgan Stanley noted, "Despite relative strength in c-store channels (+6%) during 4Q14,a slowdown in confectionary category growth within traditional FDM outlets led to HSY delivering organic sales up only +0.8% (vs. MSe +3.6%) and limited improvement in retail takeaway (+3.8%,vs. +3.3% in 3Q14) during the quarter. Non-seasonal candy sales in particular were impacted by a combination of lower retail store traffic in the Food channel and ongoing pressure from competitive snack promotion, which constrained both pricing realization and HSY's ability to respond to tactical merchandising support. While recent scanner data has suggested some improvement in trend during January, the company's outlook for 1Q15 remains relatively muted, with total sales expected up only ~5.5% (+3.5% organic) as a result of a shorter Easter period and an innovation pipeline which is not expected to gain traction until 2Q15." Hershey Co. closed on Monday at $104.95.