MW Higher cocoa prices will pressure Hershey's stock, analyst says

By Steve Gelsi

Piper Sandler downgrades Hershey Co. to underweight from neutral on expectation of stubbornly high cocoa prices

Hershey Co.'s stock fell Friday, as Piper Sandler cut its rating on the chocolatier to underweight from neutral on Friday, as cocoa prices are expected to stay high.

Piper Sandler Analyst Michael Lavery slashed his price target for Hershey's stock $(HSY)$ by $23 to $120 a share over "expectations that recently elevated cocoa costs will last longer than initially anticipated."

Watch: Why cocoa prices surged and what that means for the cost of chocolate

Hershey's stock fell 1% on Friday.

Lavery is betting more than other analysts that the cocoa price impact will eat into Hershey's profit in 2026.

He cut his 2026 profit estimate for Hershey to $7.05 a share, from $8.50 a share, putting it the analyst consensus estimate of $8.07 a share.

He also knocked 30 cents off his 2025 profit estimate for Hershey to $7.65 from a share, but that figure is above the consensus analyst view of $7.51 a share.

Overall, the Piper Sandler view on cocoa prices has worsened, he said.

"This year's cocoa crop had a good start in 2024, but has tapered offsince on a severely dry November and December, risking a fourth deficit," he said. "The mid-crop runs from December to February, and has lagged expectations, with yet another deficit looking likely (or possibly very small surplus, which looks unlikely to help)."

Hershey's stock has fallen 11.1% in 2025, while the S&P 500 SPX has gained 4%.

The continuous cocoa contract (CC00) has fallen 6.3% so far this year but it's up about 49% in the past three months and up 115% in the past year.

-Steve Gelsi

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January 31, 2025 11:08 ET (16:08 GMT)

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