Hershey's Raising The Bar? - This Analyst Thinks Shares As Fairly Valued Ahead Of Investor Day - Hershey (NYSE:HSY)

Morgan Stanley analyst Pamela Kaufman reiterated an Equal-Weight rating on the shares of Hershey Co HSY with a price target of $246.
Hershey is set to host its first Investor Day in five years on March 22, 2023.
The company is well positioned to sustain topline growth ahead of packaged food peers beyond 2023 and the analyst sees potential for the company to raise its long-term topline growth algorithm from 2-4% to 3-5%.
Hershey's growth outlook is supported by about 3% underlying CMG category growth, benefiting from greater pricing power and renewed consumer preferences for indulgent snacks.
Also, 50-100 basis points benefit from growth in Salty Snacks and an incremental 1-2% benefit from acquisitions, which contributed 2% growth to topline on average over the last five years support outlook, said the analyst.
The analyst added that the combination of strong pricing, moderating input cost inflation, and the opportunity to drive supply chain/distribution efficiencies support a recovery toward 45% gross margins by 2025.
With HSY's shares up 19% in the last 12 months and valuation at 25.3x2024 P/E, investor expectations for HSY are high, remarked the analyst.
The analyst believes HSY deserves to trade at a premium valuation given its strong fundamental outlook, but at a 38% P/E premium to the group, HSY's advantaged growth profile is appropriately reflected in its valuation.
Price Action: HSY shares are trading lower by 0.22% at $242.61 on the last check Monday.