Piper Sandler downgraded Hershey to Neutral from Overweight with a price target of $200, down from $240, as the firm trims its estimates due to higher cocoa costs driven by supply shortages. The firm estimates 12%-15% Hershey’s cost of goods sold is cocoa and expects “significant” pricing increases will be needed to cover these higher costs if they do not recede. While stating that uncertainty makes modeling “very difficult,” the firm maintains its 2023 EPS estimate and lowers its 2024 and 2025 EPS forecasts.
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