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Holiday shoppers may be stocking up on products from The Hershey Company (HSY), but it is the recent management makeover at the company that has Zacks senior consumer products analyst Steven Ralston, CFA reiterating his Buy recommendation on the shares this morning:
'The Hershey Trust is not satisfied with the company's recent results and has replaced eight Directors and the CEO. The new management team, led by David West, is expected to recharge growth at Hershey's in addition to continuing with the three-year Global Supply Chain transformation plan. The share repurchase plan continues with the incremental $250 million authorized in December 2006 by the Board.
'Since the stock is at the low end of its historical valuation range, Hershey's stock is attractive and remains rated a Buy. The stock is currently trading at the lower end of the five year P/E range at 18.0. Hershey's EPS growth should begin re-accelerating in mid-2008 by focusing on core products, introducing new products, reducing costs, and expanding operations overseas.
'Despite the recent earnings disappointments and reduced earnings guidance for 2007, the stock appears to be attractively valued at the current levels. The stock price target of $57.25 is based on a mid-range P/E multiple of 27 times our 2007 EPS estimate.'
Read the full analyst report on HSY.
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