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Argus Upgrades Hershey To Buy, Expects A Rebound In International Sales

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  • The share price of Hershey Co (NYSE: HSY) has dipped 16.15 percent year-to-date, touching a low of $84.56 in December 3.
  • Argus’ Jim Kelleher has upgraded the rating on the company from Hold to Buy, with a price target of $96.
  • The upgrade is based on expectations of higher sales in 2016, as well as an EPS recovery. Kelleher also expects upside to the currently discounted stock valuation to attractive levels.

Analyst Jim Kelleher mentioned that “Hershey is expanding margins as acquisition benefits and premium product sales in North America offset weak overseas results and currency headwinds.”

The company is also on track to deliver moderate, low single-digit EPS growth in 2015, with the growth accelerating in 2016, as Hershey laps tough currency comps. The company is also expected to benefit from a rebound in international sales in 2016.

In the near term, however, the company is likely to continue to face challenges due to “fewer consumer shopping trips, foreign currency headwinds, and weak retail trends in China and India.”

On the other hand, Kelleher expects Hershey to see improving holiday sales trends in China and the US in 2016, with increasing premium product sales, online presence and expansion in the value and mass-premium segments.

For 2016, Kelleher also expects “currency pressures to diminish in the International segment and in North America as weak currencies, including the Canadian dollar, the euro, and the yen lap tough comparisons.”

Hershey has also been working on building its online presence, while executing on its margin goals.

Latest Ratings for HSY

Feb 2018JP MorganReinstatesNeutralNeutral
Feb 2018BarclaysMaintainsEqual-Weight
Feb 2018Morgan StanleyMaintainsUnderweightUnderweight

View More Analyst Ratings for HSY
View the Latest Analyst Ratings

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