Hershey stock on edge after rejecting Mondelez buyout bid

The Hershey Corporation is a leading company that manufactures chocolates and other snack products. It owns popular brands like Almond Joy, Breath Savers, Brookside, Bubble Yum, and Cadbury. Over the years, it has become one of the biggest companies in the snacking industry, with over $11 billion in annual sales and $1.8 billion in profits.

Hershey Corporation sells its products directly to consumers through its websites and to national and internationally. They are carried by many large companies like Walmart, Amazon, and Target. Hershey’s market cap has grown to over $37 billion. 

The Hershey stock price was trading at $178, while its HypeIndex figure rose to 143%.

Learn more about the HSY stock here.

Positive hype

• Hershey Corporation’s hype has jumped recently after Mondelez made an acquisition offer for the company. Mondelez is one of the biggest firms in the industry, with a market cap of over $82 billion.

• Hershey rejected the offer by Mondelez, arguing that it severely undervalued its business. This could be a negotiation strategy as it expects Mondelez to raise its purchase price.

• Other companies could come in and place a bigger bid. However, because of Hershey’ size, chances are that no other company will come in. Since Hershey has a market cap of over $37 billion, a deal could value it at over $45 billion.

• Hershey’s financial results mean that the company is doing well in a difficult market. Its sales dropped slightly to $2.9 billion, which was better than what analysts were expecting.

• Analysts have a positive outlook for HSY, with the overall stock outlook being $184, higher than the current $178. 

• Some of the most bullish analysts are from companies like RBC Capital, Mizuho, and Barclays. However, Wells Fargo analysts decided to slash the estimate from equal-weight to underweight.

Negative hype

• Hershey’s business is going through major headwinds. Its reported earnings per share growth rate for 2024 is between minus 9% and minus 6%. It also lowered its adjusted EPS growth rate to down mid-single-digits.

• The company is seeing elevated cost of doing business as cocoa prices rise. Cocoa has been one of the best-performing commodities this year, a trend that may continue.

• There are concerns that the confectionery and snacks industry is seeing a significant slowdown that could hurt its business.

• There is a likelihood that the stock will deteriorate after receiving a buyout offer from Mondelez.

Hershey stock price analysis

The weekly chart shows that the HSY share price peaked at a record high of $265 in May last year. It has remained below all moving averages and even formed a bearish flag chart pattern, a popular bearish sign. 

The stock has moved below the 50-week and 100-week moving averages, while the MACD indicator has dropped to below zero. Therefore, the stock will likely have a bearish breakout, with the next point to watch being at $150. 

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