Why Hershey Stock Has More Room to Run Despite Takeover Rejection

Core Viewpoint - Hershey Co. shares rallied due to a potential takeover bid from Mondelez International, which was ultimately rejected by Hershey's management as the valuation was deemed "too low" [1][2][3]. Group 1: Takeover Bid Details - Mondelez International made a takeover bid for Hershey, but the exact size of the offer is not disclosed. However, market reactions suggest a bid around $208 per share, which would imply a market capitalization of approximately $39 billion [4][5]. - Hershey's management rejected the offer, believing it undervalued the company, especially considering its historical market capitalization of over $56 billion [5][6]. Group 2: Market Position and Analyst Opinions - Hershey's stock is projected to have significant upside potential, with a 12-month price forecast averaging $185.17, indicating a potential increase of 1.18% from current levels [8]. - Analysts previously estimated a price target of up to $265 per share in April 2023, but current targets have declined, raising questions about the reasons behind this shift [9]. - Hershey's gross margins are reported at 44.5%, indicating strong pricing power and a competitive advantage in the market [10]. Group 3: Financial Performance and Institutional Confidence - The company has a return on invested capital (ROIC) rate of up to 25%, suggesting effective capital retention and reinvestment strategies [11]. - Over the past 24 years, Hershey has outperformed the S&P 500 by 200%, highlighting its strong historical performance despite recent declines [12]. - As of November 2024, State Street increased its holdings in Hershey by 5.8%, reflecting confidence in the stock's value, with net positions reaching $1.3 billion [13].