HSY: Future Tariff Relief Will Not Fully Offset Margin And Demand Risks

Analysts have raised their fair value estimate for Hershey to approximately $151 from about $126, citing higher long term margin expectations, modestly richer forward valuation multiples, and tariff relief that should offset slower projected revenue growth and a slightly higher discount rate.

Analyst Commentary

Recent Street research reflects a more balanced, but still cautious, stance on Hershey, with several Bearish analysts trimming price targets or maintaining neutral ratings despite operational resilience. While the underlying confection category remains healthy and innovation momentum is strong, the path to earnings normalization is seen as slower and more volatile than previously assumed.

Bearish analysts highlight that, even after the recent pullback, Hershey trades at valuation multiples that already discount a meaningful recovery in margins and growth. Incremental upside from tariff relief and cost controls is viewed as partially priced in, leaving less room for error on execution, category demand, and input cost management.

At the same time, some large firms, including JPMorgan, have nudged price targets higher in response to more constructive near term trends and better than expected results. However, these upward revisions have generally been modest and accompanied by neutral ratings, underscoring persistent uncertainty around the durability of current performance and the long term impact of changing consumption patterns, including GLP 1 related demand shifts.

The resulting picture is a stock that is increasingly viewed as fairly valued relative to its risk profile. Consensus is gravitating toward a wait and see approach. Investors are being encouraged to focus on how effectively Hershey converts tariff and cost tailwinds into sustained margin expansion, while managing category elasticity and volatility in seasonal events such as Halloween.

Bearish Takeaways

• Bearish analysts have cut or capped price targets in the $180 to $215 range. This signals limited perceived upside from current levels and a view that Hershey's valuation already embeds a robust margin recovery.
• Neutral ratings accompanying both target cuts and modest target hikes reflect concern that execution risks around innovation, c store strategy, and seasonal sell through could constrain earnings growth and re rating potential.
• Elasticity and category volume trends are cited as key swing factors. Bearish analysts warn that further price increases or softer demand in markets like Mexico could slow the pace at which earnings power is restored.
• Even with cocoa and tariff relief providing a material cost tailwind, Bearish analysts caution that these benefits may be offset by higher discounting, promotional intensity, and uncertainty around longer term consumption shifts tied to GLP 1 adoption.

What's in the News

• Hershey is scheduled to report earnings before the market opens, with Wall Street consensus expecting earnings per share of approximately $1.06, putting near term execution and margin trends in the spotlight (periodicals).
• The Board amended the company bylaws to strengthen governance, clarifying board leadership succession in emergencies and removing language tying the chair role to a specific individual while ensuring the chair is selected from independent directors (key developments).
• Hershey raised full year 2025 guidance, now targeting about 3% net sales growth and a narrower decline in reported EPS, which signals improving confidence in profit recovery despite ongoing cost and demand uncertainties (key developments).
• A new partnership with JAKKS Pacific will extend Hershey brands like Kisses, Reese's, and Jolly Rancher into collectible Charming mini dolls and bag charms. These will debut at CVS in late December 2025 and are aimed at driving incremental brand engagement with younger consumers (key developments).
• Hershey is rolling out high profile product and activation initiatives, including a limited edition Dubai inspired chocolate bar drop and a slate of convenience channel innovations such as Reese's OREO Cup and new Dot's Homestyle Pretzels flavors. This highlights its focus on premium, social media friendly launches and C store growth (key developments).

Valuation Changes

• Fair Value Estimate has increased meaningfully, rising from approximately $126.32 to about $150.90 per share. This reflects higher long term margin expectations and modestly richer valuation multiples.
• Discount Rate has risen slightly, moving from roughly 6.40% to about 6.96%. This indicates a modestly higher perceived risk profile or required rate of return.
• Revenue Growth Forecast has been reduced modestly, declining from around 3.55% to approximately 2.86%. This signals slightly more conservative top line expectations.
• Net Profit Margin Outlook has improved, increasing from about 11.38% to roughly 12.84%. This points to stronger anticipated profitability despite slower growth.
• Future P/E Multiple has edged higher, moving from roughly 22.7x to about 23.3x forward earnings. This suggests a small upward adjustment in the valuation investors are willing to pay.