From a technical standpoint the shares have been in a

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From a technical standpoint, the shares have been in a bullish trend of higher highs and higher lows since reaching a low of $83 in January 2016. To value the stock on a fundamental basis, we use peer and historical multiple comparisons, as well as a dividend discount model. PH shares are trading at 16.3-times our FY19 EPS estimate, just above the midpoint of the historical range of 10-20. On price/sales, the shares are at the top of their five-year range. The dividend yield of about 1.3% is near the midpoint of the five- year range. Compared to the peer group, PH multiples are mixed, but generally suggest fair valuation. Our dividend discount model, incorporating our revised estimates, points to a fair value of $220 per share. Blending our valuation approaches, our target price remains $210. On February 5, BUY-rated PH closed at $182.00, down $8.64. (John Eade, 2/5/18)
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M ARKET D IGEST - 13 - HERSHEY CO. (NYSE: HSY, $100.17) ................................................................................... BUY HSY: Maintaining BUY; lowering target to $120 * Hershey reported disappointing 4Q results on February 1, as net sales fell 1.6%. Non-GAAP earnings came to $1.03 per share, missing our estimate by $0.06. * Looking ahead, we expect new CEO Michele Buck to be aggressive in controlling costs and in introducing new products. * We are raising our 2018 EPS estimate to $5.38 from $5.29 and initiating a 2019 forecast of $5.56. * We believe that the recent selloff in HSY offers investors a favorable entry point. ANALYSIS INVESTMENT THESIS We are maintaining our BUY rating on Hershey Co. (NYSE: HSY) with a target price of $120, reduced from $125. This financially strong company has a focus on shareholder returns, with a stock buyback program and a record of increased dividend payments. The shares yield a relatively high 2.5%. The company reported disappointing 4Q adjusted EPS on February 1, but provided positive guidance for 2018. We believe that the stock remains attractive based on most standard metrics and that the recent selloff offers investors a favorable entry point. Our revised target of $120, combined with the dividend, implies a potential total return of 22% from current levels. RECENT DEVELOPMENTS HSY shares have outperformed over the past three months, rising 5.9% compared to an increase of 1.4% for the S&P 500. The stock has underperformed over the past year, however, falling 3.4% compared to a gain of 23.1% for the S&P 500. In an effort to expand into the salty snack market, in December 2017, Hershey agreed to acquire Amplify Snack Brands for $1.6 billion including debt. The company expects the acquisition to boost 2018 sales by 5%. On February 1, Hershey posted 4Q17 revenue of $1.94 billion, down 1.6% from 4Q16, with a slight benefit from currency translation. The decline reflected shipment timing and a difficult comparison with 4Q16, which benefited from the launch of the Cookie Layer Crunch Bar. North American earnings fell 0.9% to $1.67 billion, as lower volume outweighed higher realized prices and positive currency translation.
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