Goldman Sachs Reiterates Top Rating on Hershey (HSY) Following CEO, CFO Meetings
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Price: $186.46 -0.98%
Rating Summary:
11 Buy, 20 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
Rating Summary:
11 Buy, 20 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 6 | New: 26
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Goldman Sachs reiterated its Conviction Buy List rating and $81 price target on Hershey (NYSE: HSY) Monday following meetings with CEO, J.P. Bilbrey, and CFO, Bert Alfonso.
The firm continues to believe Hershey will deliver best-in-class sales and gross margin expansion in CY13 which, in turn, will fuel low to mid-teens EPS growth. Goldman believe Hershey can deliver 5%+ volume growth next year on: "(1) roughly 1.5%-2.5% contribution from its North American business (a potentially conservative estimate), (2) 1%-1.5% from Brookside distribution build out and (3) 2%-2.5% from continued momentum abroad."
On gross margin, the firm said it is difficult to bridge to anything less than 150 basis points of gross margin expansion given: "(1) management’s expectation of modest input cost deflation next year, (2) productivity gains that are likely to approach the high end of its $55-$70mn range ($70mn productivity alone = 140 bps of margin) and (3) volume leverage which offers an offset to mix headwinds abroad."
Lastly, Goldman sees low risk of derailment with the Hurricane Sandy impact on Halloween sales a non-event and a rational competitive environment.
For an analyst ratings summary and ratings history on Hershey click here. For more ratings news on Hershey click here.
Shares of Hershey closed at $70.35 yesterday.
The firm continues to believe Hershey will deliver best-in-class sales and gross margin expansion in CY13 which, in turn, will fuel low to mid-teens EPS growth. Goldman believe Hershey can deliver 5%+ volume growth next year on: "(1) roughly 1.5%-2.5% contribution from its North American business (a potentially conservative estimate), (2) 1%-1.5% from Brookside distribution build out and (3) 2%-2.5% from continued momentum abroad."
On gross margin, the firm said it is difficult to bridge to anything less than 150 basis points of gross margin expansion given: "(1) management’s expectation of modest input cost deflation next year, (2) productivity gains that are likely to approach the high end of its $55-$70mn range ($70mn productivity alone = 140 bps of margin) and (3) volume leverage which offers an offset to mix headwinds abroad."
Lastly, Goldman sees low risk of derailment with the Hurricane Sandy impact on Halloween sales a non-event and a rational competitive environment.
For an analyst ratings summary and ratings history on Hershey click here. For more ratings news on Hershey click here.
Shares of Hershey closed at $70.35 yesterday.
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