The analysts' re-rating reflects the expected intense competitive landscape in 2024 across HSY's chocolate/confection categories in the U.S., as probably Mars and Ferraro/Ferrera will likely elevate their marketing, promotional spending, and innovation in the upcoming year.

The analyst notes that in 2023, HSY's shares have come under pressure due to the overall underperformance of the packaged food space (GLP-1 concerns, higher interest rates, and weakening macros pressuring volume) and share erosion.

Modi expects Hershey's efforts to regain volume growth and market share to be impacted by these macro factors, making it difficult for the company to realize the net pricing required to fully offset rising sugar/cocoa costs.

Consequently, the analyst cuts estimates for revenue to $11.239 billion (from $11.249 billion prior) for FY23 and $11.519 billion (from $11.582 billion earlier) for FY24.

Also, EPS estimates are reduced to $9.53 (from 9.54) for FY23 and $10.10 (from $10.23) for FY24.

Price Action: HSY shares are trading lower by 1.27% at $190.62 on the last check Tuesday.