TD Cowen reiterates Hershey stock Buy rating on innovation pipeline

TD Cowen has reaffirmed its Buy rating on Hershey (NYSE: HSY) stock, setting a price target of $210.00. The company's current stock price is $176.21, with a market capitalization of $35.4 billion and a P/E ratio of 24.03. InvestingPro analysts believe Hershey is undervalued, presenting potential upside for investors. The firm highlighted that Hershey's recent market share losses do not necessarily forecast future performance.

During Hershey's Investor Day, the company announced plans to boost R&D spending by 25% in 2026, aiming to achieve a $1.5 billion five-year innovation pipeline in sales. Hershey's marketing strategy for the second half of the year includes a 30% increase in brand investment and a 30% rise in new innovation launches compared to the first half. Upcoming products comprise premium creme-filled Hershey bars and cookie-filled Reese's Pieces.

TD Cowen noted a marked improvement in the confectionery category's share trends over the past four weeks, attributing this resilience to the category's overall strength. The firm considers Hershey's guidance of a 1.5% second-half growth rate to be conservative, given the company's recent positive trajectory. Hershey has a long-standing history of dividend payments, maintaining a 56-year streak and currently offering a 3.3% yield, according to InvestingPro data.

TD Cowen also highlighted Hershey's ability to capitalize on commodity deflation and execute merchandising and innovation plans to enhance competitiveness. However, the firm identified Hershey's year-to-date growth of 3.7% as trailing the category's average growth of 4.8%. While UBS pointed out crowded positions in consumer staples without listing Hershey among the most crowded stocks, Bank of America provided an update on US packaged food sales trends, though no specific information about Hershey was disclosed.