Zhitong Finance has learned that on Tuesday, BNP Paribas downgraded the rating of Hershey Company (HSY.US) from "beat the market" to "neutral", citing recent cocoa prices Rising looks like is not a temporary factor caused by natural environment. Earlier, Morgan Stanley also downgraded Hershey's stock rating from "hold watch" to "reduce", citing several risks that hinder Hershey's midterm prospects, including the "inflation" of high cocoa prices.

Cocoa futures prices have risen by more than twice this year. On Tuesday, it broke through the $10,000 per tonne mark for the first time in history and then retreated slightly in historic gains. At the same time, Hershey's stock price has risen only 2.4% since early January, underperforming the S&P 500 index and the large consumer need index.

Max Gumport, an analyst at BNP Paribas Securities subsidiary BNPP Exane, wrote in a report to clients: "The implementation of EU forest logging regulations is increasing the structural costs of the system." Earlier, BNPP Exane and former executive director of the Asian Cocoa Association, Marc Donaldson of Barry-Callebaut Asia Pacific, held an expert teleconference.

He said that due to EU regulatory requirements, "a large part of the cocoa price increase we are currently seeing is likely to be structural." This is a "change" in his position. Previously, he believed that much of the surge in cocoa prices was due to "temporary supply and demand imbalances" associated with unfavorable weather in West Africa.

Due to the structural rise in cocoa prices, Gumport lowered his earnings per share for Hershey in 2025 by 9% to $9.59; data shows that this is the low point of Wall Street's expectations, with analysts generally expecting Apple's earnings per share next year to be $10.19.

In the earnings conference call on February 8, Hershey CEO Michele Buck said that the company will use "every tool in our toolbox", including raising prices to fight input inflation. Hershey CFO Steve Voskuil added: "If prices continue to rise, it will be more favorable for the second half of this year and may be more favorable for 2025."

However, these comments are not enough to alleviate Morgan Stanley's concerns. A few days after the performance conference, Morgan Stanley downgraded Hershey's stock rating from "hold watch" to "reduce", citing several risks that hinder Hershey's midterm prospects, including the "inflation" of high cocoa prices. According to data, Hershey currently has 6 "buy" ratings, 19 "hold" ratings, and 1 "sell" rating.