Hershey shares jump 3% after Goldman Sachs double upgrade

Hershey shares surged 3% in premarket after Goldman Sachs issued a rare double upgrade on the chocolate maker, raising its rating to buy from sell and boosting its price target to $222 from $170.

The new target implies more than 19% upside from Monday’s closing price.

The upgrade comes after a challenging year for Hershey, which has faced repeated guidance cuts amid rising cocoa costs, tariffs, and market share pressures.

But Goldman Sachs analyst Leah Jordan argued in a Tuesday note that many of these risks are now fully priced into the stock, while several tailwinds are beginning to emerge.

Cost pressures already priced in

“After multiple guidance reductions over the past year, we now see a compelling risk/reward set-up for the stock, with cost pressures (e.g., cocoa, tariffs) largely known and reflected in expectations,” Jordan wrote.

She added that Hershey’s improved market share trends, combined with expected incremental tailwinds in the second half of the year, strengthen the case for upside.

Goldman expects the company’s recent pricing announcements to drive outsized earnings growth in fiscal year 2026.

The analyst highlighted Hershey’s historically strong pricing power, tied to its portfolio of iconic brands, as a key factor supporting this view.

Jordan also noted that a solid consumer backdrop should help offset potential demand elasticities, allowing the company to pass on costs more effectively.

Market share recovery across categories

Hershey has faced some market share erosion over the past year, but Jordan pointed out that recent data shows improvement.

The company has begun to regain ground in the seasonal, sweets, and mints categories, aided by better shelf placement and a renewed emphasis on marketing and innovation.

The recovery in these categories, she said, should provide further support in the months ahead.

Hershey’s management has also been implementing targeted strategies to improve performance in convenience stores, a key distribution channel for chocolate and snack sales.

One initiative highlighted in the report is the company’s “gold standard planogram,” a data-driven approach to merchandising in convenience stores.

Jordan expects this strategy to enhance sales performance as it is rolled out more broadly, with adoption set to reach 60% of stores by year-end, up from 50% currently.

The company in its Q1 reported a less-than-feared decline in sales than anticipated, alongside exceeding profit expectations.

Analysts still cautious despite upgrade

Despite Goldman’s bullish stance, the broader analyst community remains cautious.

Of the 24 analysts covering Hershey, 17 still rate the stock as a hold, according to LSEG data.

Shares were trading 3.31% higher at $191.91 in premarket activity on Tuesday following the upgrade.

The stock has gained more than 9% so far this year, though it continues to lag behind the broader market.

Goldman’s call marks a notable shift in sentiment on Hershey, underscoring the potential for improved profitability as input costs stabilize and strategic initiatives gain traction.

Whether the company can sustain this momentum and meet elevated expectations in 2026 remains to be seen, but the latest assessment suggests the risk/reward profile is now tilting in its favor.