CLOSINGS: View Closings

Kiss of death? Healthier eating and surging cocoa prices are hurting Hershey

Investors no longer seem to have a sweet tooth for Hershey. The stock has plunged 15% already this year, and a Wall S...

Posted: Apr 11, 2018 3:31 PM
Updated: Apr 11, 2018 3:31 PM

Investors no longer seem to have a sweet tooth for Hershey. The stock has plunged 15% already this year, and a Wall Street analyst just slapped a rare sell rating on the stock.

The problems for Hershey, as UBS analyst Steven Strycula sees it, are that surging cocoa prices are eating into its profit and many Americans are choosing healthier snacks.

Strycula notes that Hershey also faces tougher competition on the high end from the likes of Cadbury owner Mondelez, Lindt and Ferrero, which recently bought the US business of Nestle.

Those are the main reasons Strycula downgraded Hershey to a sell and put a new price target of $90 on the stock. That's 6% lower than where Hershey shares are trading.

To its credit, Hershey, known mainly for its trademark candy bar, Hershey Kisses and Reese's Peanut Butter Cups, has been trying to expand beyond chocolate.

Related: Nestle sells US candy brands to the owner of Nutella

The company unveiled Hershey Gold, a candy bar with no chocolate, last year. Hershey Gold is made with caramelized creme, pretzels and peanuts.

Hershey also bought Amplify Snack Brands, the maker of SkinnyPop, last year for $1.6 billion. That deal followed acquisitions of BarkThins owner Ripple Brand Collective in 2016 and the jerky company Krave Pure Foods in 2015.

But Strycula thinks these moves may be too little and too late.

He notes that Hershey still faces tough competition from Mondelez - which tried to buy Hershey in 2016 but dropped the bid after Hershey rejected it - and privately held Mars in its core candy business.

And Hershey isn't going to have an easy time with its newly acquired snacks, either. SkinnyPop is in a crowded field, and three other big food companies gobbled up popcorn companies last year too.

Campbell Soup now owns Pop Secret following its purchase of Synder's-Lance for nearly $5 billion. Boomchickapop was bought by Conagra while Popcorn, Indiana, was acquired by private equity firm Kelso & Co., the owner of Eagle Foods.

Add it all up and it looks like unless Hershey is able to generate more sales and profits from newer products, the company's future may not be so special. It could be dark instead.

Huntsville
Overcast
68° wxIcon
Hi: 70° Lo: 55°
Feels Like: 68°
Florence
Overcast
63° wxIcon
Hi: 66° Lo: 53°
Feels Like: 63°
Fayetteville
Overcast
63° wxIcon
Hi: 66° Lo: 53°
Feels Like: 63°
Decatur
Overcast
66° wxIcon
Hi: 69° Lo: 54°
Feels Like: 66°
Scottsboro
Overcast
64° wxIcon
Hi: 71° Lo: 57°
Feels Like: 64°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Confirmed Cases: 158701

Reported Deaths: 2680
CountyConfirmedDeaths
Jefferson23292377
Mobile16916315
Tuscaloosa10345140
Montgomery10250197
Madison935096
Shelby739063
Baldwin665869
Lee654665
Calhoun459961
Marshall439550
Etowah428551
Houston417034
Morgan416435
DeKalb342629
Elmore320853
St. Clair295542
Limestone287230
Walker279492
Talladega266435
Cullman248024
Lauderdale229442
Jackson215915
Autauga205931
Franklin205531
Colbert202132
Russell19493
Blount193225
Chilton188432
Dallas186627
Coffee177111
Dale176351
Covington174729
Escambia172730
Clarke135217
Chambers135044
Pike134113
Tallapoosa132987
Marion108129
Barbour10339
Marengo101922
Butler101140
Winston92913
Geneva9067
Lawrence85832
Pickens85218
Bibb84014
Randolph82716
Hale76830
Washington74912
Clay74412
Cherokee73814
Henry7176
Lowndes71328
Bullock64917
Monroe64610
Crenshaw60830
Perry5926
Fayette57713
Cleburne5698
Wilcox56812
Conecuh56113
Macon53620
Lamar4965
Sumter47221
Choctaw39212
Greene34216
Coosa2043
Out of AL00
Unassigned00

Tennessee Coronavirus Cases

Confirmed Cases: 247587

Reported Deaths: 3131
CountyConfirmedDeaths
Shelby36376562
Davidson31748337
Knox1273889
Rutherford11893114
Hamilton11758109
Williamson710256
Sumner6114110
Wilson469059
Putnam444056
Montgomery421756
Out of TN407935
Madison378079
Sullivan376346
Bradley358723
Washington347651
Sevier335122
Blount334336
Maury330737
Robertson261441
Hamblen246448
Tipton236723
Dyer223732
Unassigned22063
Gibson216244
Hardeman189833
Coffee189425
Obion178822
Trousdale17758
Greene175052
Bedford170920
Fayette169225
Dickson169119
Anderson168814
McMinn164036
Loudon162311
Lawrence161820
Cumberland161025
Wayne16007
Weakley156126
Carter155633
Jefferson155521
Monroe146228
Warren143910
Lauderdale143617
Henderson141626
Hardin139720
Macon134325
Roane13027
Franklin129519
Haywood129527
Overton122717
Hawkins120925
White118814
Johnson11507
Carroll114826
Marshall113810
McNairy112927
Rhea111118
Cheatham106011
Cocke105814
Campbell103012
Bledsoe10174
Smith99113
Lake9853
Giles96936
Fentress91611
Lincoln8973
Crockett86820
Hickman80315
Henry79611
Marion7739
Chester73214
DeKalb73217
Decatur66311
Grainger6114
Grundy57011
Union5433
Claiborne5266
Polk51113
Jackson4525
Humphreys4504
Morgan4437
Houston42017
Benton4199
Unicoi4183
Cannon4152
Clay40613
Lewis4033
Scott3845
Sequatchie3462
Stewart33111
Meigs3276
Perry3082
Pickett2747
Moore2692
Van Buren2071
Hancock1193

Community Events