NEW YORK (TheStreet) -- Shares of Hershey Co. (HSY) are dropping 0.09% to $88.97 in Monday's early morning trading session after analysts at Credit Suisse lowered its price target to $93 from $101 due to continuing problems in China. The firm maintained its "neutral" rating.
The action comes after the company announced a profit warning, and said that it is now expecting $0.20 of dilution from acquisitions and divestitures.
Analysts believe that weakness in the core China business resulted from competitive promotional spending during the quarter, according to the note.
"We believe that Hershey will eventually return to growth in China, but as we have said previously, it won't be an easy fix," analysts said.
The Pennsylvania-based company is a provider of chocolate and sugar confectionery.
Separately, TheStreet Ratings team rates HERSHEY CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HERSHEY CO (HSY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 10.9%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Food Products industry and the overall market, HERSHEY CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- 49.57% is the gross profit margin for HERSHEY CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.62% is above that of the industry average.
- HERSHEY CO reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HERSHEY CO increased its bottom line by earning $3.77 versus $3.61 in the prior year. This year, the market expects an improvement in earnings ($4.31 versus $3.77).
- Net operating cash flow has increased to $256.40 million or 25.83% when compared to the same quarter last year. Despite an increase in cash flow of 25.83%, HERSHEY CO is still growing at a significantly lower rate than the industry average of 81.00%.
- You can view the full analysis from the report here: HSY Ratings Report