Some Incremental Costs to Consider, but Activation, Innovation, and Cocoa Deflation Spur 2H Confidence; Stay Neutral

Research evidence excerpt

Some Incremental Costs to Consider, but Activation, Innovation, and Cocoa Deflation Spur 2H Confidence; Stay Neutral

J P M O R G A N North America Equity Research

30 July 2026

Hershey Co.

Some Incremental Costs to Consider, but Activation, Neutral

Innovation, and Cocoa Deflation Spur 2H Confidence; HSY, HSY US

Stay Neutral Price (30 Jul 26):$177.23

▲Price Target (Dec-27):$193.00

Prior (Dec-27):$191.00

The HSY shares were -2% at time of writing (vs. S5PACK -3%) following sizable

2Q26 OSG and EPS beat and narrowing its annual OSG and EPS guidances to the Food Producers & Retailers

upper halves of its ranges (initial take). We think the muted share price reaction to Thomas Palmer, CFA AC

a beat-and-raise quarter is that timing items, including delayed marketing spend (1-212) 622-5582

and favorable shipment timing, contributed to the beat, while forward earnings thomas.palmer@jpmorgan.com

estimates (and gross margin) are likely coming down for incremental cost Brandon Cohen, CPA

pressures and higher planned spending in 2H. Though it does not appear to be a (1-212) 622-4168

brandon.cohen@jpmorgan.com

concern for HSY, we also continue to hear from investors who wonder whether J.P. Morgan Securities LLC

HSY’s share losses in chocolate to Mars might eventually lead to changes such as

increased promotions. Because of this, 2H26 measured consumption trends could

be given more importance than normal because HSY expects its innovation Quarterly Forecasts (FYE Dec)

(Hershey Creme premium chocolate), activations around the Hershey movie, and Adj. EPS ($)

a strong Halloween to aid share trends. We remain Neutral the shares but appreciate 2025A 2026E 2027E

Q1 2.09 2.35A 3.10

that the shares could re-rate higher if HSY’s unit share trends rebound in 2H26. Q2 1.21 1.90A 2.18