An analyst upgraded Hershey Co. Thursday, predicting the nation's second-largest candy maker would benefit this year as consumers trade down to less expensive chocolate.
Citi analyst David Driscoll raised his rating on the Hershey, Pa.-based company's stock to "Buy" from "Hold," saying recent retail trends show improvement for the business.
Shares rose 78 cents, or 2.3 percent, to $34.66 in morning trading.
Hershey could raise its guidance when the company announces its fourth-quarter results next Tuesday, though the company may keep its estimates conservative, Driscoll said.
However, the analyst raised his estimates for fiscal 2009 to $1.97 from $1.95 per share. For 2010, he expects the company to earn $2.13 a share, 3 cents up from his previous estimate.
Analysts predict earnings per share of $1.90 in 2009, and $2.02 in 2010, according to a Thomson Reuters survey. For fiscal 2008, which ended in December, analysts estimate income of $1.84 per share.
Driscoll said Hershey plans a 20 percent boost in marketing in 2009, on top of a 20 percent boost in 2008. Driscoll also said profit margins should improve as the cost of dairy products and other key ingredients drops.
He also said the company's 10 percent price increase announced last August will help, too.
