Chocolate stocks used to be the epitome of sleepy stability, until cocoa futures quadrupled and an ordinary candy bar suddenly became a luxury item.
In the last 18 months, Hershey has absorbed the steepest raw-material shock in its 130-year history, posted the first year-over-year earnings decline in a decade, and watched its share price fall roughly 25% from the 2023 peak.
Yet buried in the headlines is a string of overlooked developments, some protective, some powerful, that could decide where the stock sits by this time next year. So where is HSY headed over the next 12 months?
Margin Pain Is Real But Hedging Softens the Blow
Cocoa priced above $11,000 per metric ton is a profit-killer. Management now expects adjusted gross margin to contract 650–700 basis points in 2025, driving a mid-30% drop in adjusted EPS relative to last year.
What rarely makes the evening news is Hershey’s weapon against commodity chaos. The company runs its own trading subsidiary in Switzerland that handles all aspects of cocoa procurement, including price-risk management, and keeps a deep book of futures and options.
Those derivatives produced a $460 million pre-tax gain in late 2024, cash that cushioned the blow just as rival candy makers were taking profit warnings.
CFO Steve Voskuil summarized it best on a January conference call: “One of the benefits of a great hedging team is we’re not paying spot market prices.” The translation is while margins will fall in 2025, they won’t crater to the degree the raw-cocoa chart implies, leaving upside surprise potential if bean prices simply stop rising.
Salty Snacks Are Becoming a Second Engine
Ask most retail shareholders what Hershey sells and they’ll answer “Reese’s and Kisses.” Yet the salty-snack division, home to Dot’s Pretzels, SkinnyPop popcorn and Pirate’s Booty, already delivers 10% of total revenue and grew segment income 8.1% in the latest quarter despite the cocoa storm.
Dot’s is the star. Its new Buffalo-seasoned twists debut nationwide in July, aiming straight at football-season pantry loading.
Management’s internal goal is to double salty-snack revenue share by 2028, giving Hershey a profit pool that is cocoa-price agnostic and structurally higher-margin than chocolate. Few equity models adjust for that trajectory. Doing so shrinks the perceived earnings hole created by cocoa inflation.
Fresh Capacity Is Coming Online Below Wall Street’s Radar
Remember the $90 million expansion of Hershey’s Nuevo León plant announced back in 2022? Those two high-speed production lines are scheduled to reach full run-rate this fall, lifting North American output capacity by roughly 25%, just in time for the 2025 holiday crush.
Because the investment is already funded, the incremental volume arrives with minimal capital drag, enabling Hershey to push more product without chasing spot manufacturing contracts that cost 15–20% more per pound.
Investors who focus only on retail price increases miss this lever of gross-margin defense.
Little-Known ESG Milestone To Unlock Fund Flows
Chocolate’s supply chain carries reputational landmines, from palm-oil deforestation to child labor on West African farms.
Against this backdrop, Hershey’s ESG team set an aggressive goal to achieve a verified deforestation-free palm supply chain by the end of 2025 and full plantation traceability. According to the latest grievance log, 26 non-compliant palm producers are already on a “No-Buy” list, and zero open investigations remain.
If auditors sign off on that target early in 2026, a wave of sustainability-screened funds that currently exclude Hershey could become buyers overnight. The headline risk that once justified an ESG discount might flip into a premium.
Innovation and Pricing Power Are Still Intact
Hershey raised North American confectionery prices nearly 10% last year and still grew Q4 2024 volumes, a feat analysts predicted was impossible.
The company continues to flex that pricing muscle, rolling out smaller “portion-on-the-go” packaging and plant-based Reese’s that command roughly a 40% higher unit price than their dairy counterparts.
At May’s Sweets & Snacks Expo, Hershey showcased proprietary smart-barcode wrappers that let consumers scan a package to verify ethically sourced cocoa and unlock loyalty points, a frictionless funnel from brick-and-mortar shelves into Hershey’s growing first-party data ecosystem.
The Street has yet to quantify how those data-driven promotions could boost cross-selling and direct-to-consumer margins.
How Much Bad News Is Already Priced In?
At a recent sub-$200 share price, Hershey trades near 26× trailing earnings, high for a consumer staple but deceptive given the 2025 profit dip. On forward numbers, the below is what we see.
What the table misses is how conservative the EPS denominator may be. Management’s $6.00–$6.18 guidance assumes cocoa stays north of $10k through Easter.
Every $500 per-ton pullback adds roughly $0.20 to EPS, according to internal sensitivity figures shared but scarcely headlined in the May investor deck.
Analysts, for their part, are already baking in rebound math: the median 12-month target sits at $160.50 with a bear-case of $120 and a bull-case of $211. Those ranges look wide until you remember the stock dropped from $240 to $150 in just ten months, volatility cuts both ways.
Scenario Map for July 2026
These valuations assume a modest 10–15% premium to peer multiples, justified by Hershey’s best-in-class branded profitability and hedging discipline.
In the base case, shareholders pocket a mid-single-digit total return (price plus dividend). The bull case unlocks 20% upside, roughly where the most optimistic sell-side target sits today.
Under-the-Radar Catalysts Worth Watching
Football season line extension are bullish given Dot’s Buffalo Twists launch in July, timed for NFL kickoff. Management claims the new flavor out-tested its original seasoning by 300 basis points in repeat-purchase intent.
The Super Bowl ad double-play is another catalyst with Reese’s returns to the Big Game broadcast with a 30-second spot teasing a “new format innovation.” 2024’s ad delivered the brand’s highest single-day search interest in five years; a repeat could juice Q1 sell-through.
Expect the Nuevo León throughput ramp to shine too if and when the Mexico lines hit nameplate efficiency by holiday season, analysts will likely raise Q4 margin estimates.
Also, Hershey has sought CFTC clearance to take delivery of a larger physical cocoa position on the ICE exchange, suggesting management thinks beans are closer to the top than the bottom.
Risks That Could Sour the Story
A third consecutive failed harvest in West Africa would invalidate the base-case margin recovery, though. In addition, so far buyers have swallowed double-digit increases, but elasticity could bite if inflation stays sticky into 2026.
Keep an eye on PepsiCo and Campbell’s, both of whom are circling the pretzel and popcorn aisles as shelf wars are set to compress salty-snack margins faster than expected.
Where Will Hershey Stock Be In 1 Year?
Hershey stock today reflects a company caught between record-high cocoa costs and guarded consumer spending.
Look closer, and you’ll see a sophisticated hedging operation already absorbing part of the commodity shock as well as a fast-growing salty-snack division that investors still treat as an afterthought.
Capacity and pricing levers can expand gross margin even before cocoa normalizes and a near-term ESG milestone is slated to invite a fresh class of sustainability-mandated buyers.
Put those pieces together and the most probable landing zone one year out is $175–$185 per share, essentially flat to modestly higher from current levels but with a fat right-tail skew if cocoa prices mean-revert. Add a 2.4% dividend and medium-risk investors get paid to wait for the commodity cycle to turn.
In short, Hershey’s 2025 earnings pothole may already be yesterday’s news. The real test is whether management can prove, to Wall Street and Main Street alike, that America’s favorite candy company is far more than cocoa and sugar. If the answer is yes, the stock’s next rerating could taste a lot sweeter than the last 18 months have felt.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.