Hershey (HSY) now sits at a low it hasn’t seen since late 2021.
Part of the reason for that was devastating rain on the Ivory Coast, which supplies about 40% of the world’s cocoa. Worse, as noted by AfricaNews.com, “After exceptionally heavy rains this year, the country’s cocoa warehouses are almost empty with producers expecting a harvest of between 3 to 4 times smaller than last year.”
Not helping, Piper Sandler recently lowered its rating on HSY to neutral from overweight, and reduced its 2024 and 2025 EPS estimates because of the cocoa issue. The firm also cut its price target on HSY to $200 from $240.
While all seems bleak for HSY at the moment, we also have to remember that crisis eventually leads to opportunity. In fact, after falling from about $255 to $180, the HSY pullback may be overdone. It’s not as if HSY will ever go out of business, or face an extended long-term threat here. It’s simply down on a temporary issue. Better, while investors wait for the potential recovery in HSY, they can collect its yield of 2.66%.