Hershey (HSY) is expected to post strong first-quarter results amid "solid" consumption trends, while the chocolate maker will likely affirm its 2026 outlook, RBC Capital Markets said Tuesday.
Scanner data indicate "solid" consumption at the total company level in the quarter, driven by strong gains in confection and salty snacks, the brokerage said in a note to clients. Hershey is scheduled to report first-quarter results Thursday.
"With an earlier Easter, confection data for the final week of March is up strong (over high-teen percentage)," Nik Modi, RBC's co-head of global consumer and retail research, said. "This level of growth would suggest that (Hershey) will be able to clear topline growth expectations."
RBC expects first-quarter earnings of $2.08 a share on revenue of $3.03 billion. Wall Street is looking for $2.05 and $3.03 billion, respectively, according to the note. Although the three-month period was guided to be "the strongest quarter on the topline," margins are expected to be pressured by high cost of inventory, Modi said.
The brokerage expects Hershey to reaffirm its full-year outlook given that the company is just one quarter through its fiscal year and maintained the outlook just recently. "That said, we see a more neutral risk to reward given the high bar that (Hershey) set for itself this year," Modi wrote.
Late last month, company said it continued to expect full-year adjusted EPS to grow 30% to 35% and net sales to rise 4% to 5%.
The management's tone was positive at its investor day, with its long-term outlook suggesting the company has EPS visibility through 2027, RBC said. "With that said, the proof is now in the pudding on whether (Hershey's) strategy can revert ongoing volume declines and market share losses."
The brokerage has a sector perform rating on Hershey's stock with a $212 price target.
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