Exane downgrades Hershey to Neutral on cocoa cost inflation

Exane BNP Paribas downgraded Hershey to Neutral from Outperform with a price target of $208, down from $232. The analyst says the implementation of the European Union deforestation regulation is adding structural costs into the cocoa system. The firm previously believed the vast majority cocoa price surge was likely due to a “temporary supply demand imbalance” related to unfavorable weather in West Africa. However, a meaningful portion of the cocoa inflation “could well be structural,” the analyst tells investors in a research note.