Citi downgraded Hershey to Sell from Neutral with a price target of $182, down from $195, which implies 7% potential downside in the share price. The firm says volume weakness and “stepped up” cocoa inflation present “looming downside risk.” Citi sees a “challenging year” for gross margin, saying Hershey’s recently announced pricing plans for 2025 will likely not be enough to offset cocoa inflation. The company’s current volume trends have “underwhelmed,” in part due to continued distribution declines in measured retail channels, the analyst tells investors in a research note. The firm thinks price elasticity could be particularly challenging for Hershey next year, especially if chocolate competitors do not follow the company’s lead on pricing, given other snacks categories could be lowering prices.
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