HSY changes
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- Price
- $168.79 → $166.37(−1.4%)
- Thesis
- removed: Hershey trades around $168.79, below the analysts' intrinsic value, and near the bottom of its $161-$239 range over the past year. The market is worried added: Hershey's price reflects worry about removed: volume. added: shrinking candy volumes, not a temporary mood. Cocoa prices removed: hit records added: spiked in removed: late 2024, so Hershey raised removed: its prices removed: by about removed: 12%, and in Q2 2026 it sold about 8% less candy added: 12%. Shoppers responded by removed: volume. added: buying less candy. But profit is recovering. removed: Adjusted gross added: Gross margin rose removed: from 38.1% to 41.6% added: sharply in removed: Q2 2026, added: the most recent quarter, and management raised its removed: 2026 outlook to adjusted added: full-year earnings removed: per share of $8.36-$8.52, up 32.5% to 35%. added: outlook. Cocoa has fallen removed: to roughly $5,500 per ton, less than half added: from its peak, and management expects added: further declines into 2027, though cocoa removed: costs to fall added: jumped again added: briefly in added: early September 2026 before easing. For the gap to close, volume needs to stop falling while cocoa costs keep easing. That would let margins keep rising through 2027. Hershey's brands removed: give it the added: showed real pricing removed: power a wide moat needs: it added: power, since the company raised prices sharply and kept most of its customers. removed: If volumes level off while cocoa costs ease, margins can keep rising through 2027, and the discount can close. The removed: counter-case: if higher added: main risk to this case is that high prices, added: a weaker low-income removed: shoppers, added: shopper, and weight-loss drugs keep shrinking how much candy people removed: buy, Hershey's growth would rely on price increases it cannot repeat forever. And cocoa added: buy. Management has removed: already shown it can jump again, added: described 2026 and 2027 as removed: it did added: years of restoring profit. It expects a more balanced mix of sales and profit growth to return from 2028. The next tests are cocoa costs through the rest of 2026 and full-year 2026 results due in removed: August 2026. added: early 2027. If volumes stabilize and cocoa keeps easing, the gap could close over the next several quarters. If cocoa spikes again or volumes keep falling, it could take until 2028.