In a report released today, Megan Alexander from Morgan Stanley maintained a Hold rating on The Hershey Company (HSY – Research Report), with a price target of $183.00.
Megan Alexander’s rating is based on Hershey’s strategic acquisition of LesserEvil, a company known for its better-for-you snacks, which aligns with Hershey’s goal to diversify its snacking portfolio. While the acquisition is expected to enhance Hershey’s presence in the salty snacks market and contribute to topline growth, the immediate financial impact is relatively modest, with LesserEvil projected to represent only about 1% of Hershey’s pro-forma revenue by 2026.
Despite the potential for synergies and growth, the acquisition’s contribution to earnings per share is estimated to be around 1% by 2026, indicating limited short-term financial benefits. Additionally, the overall popcorn category has faced challenges, although LesserEvil has managed to gain market share. These factors contribute to a Hold rating, as the long-term growth prospects are balanced by the current modest financial impact.
In another report released on March 30, RBC Capital also maintained a Hold rating on the stock with a $178.00 price target.