Hershey shares to rally on lower cocoa prices, other cost savings, analyst says

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Credit Suisse on Friday upgraded Hershey to outperform from neutral, citing the potential for the candy maker to significantly reduce expenses and prove it was right to deny a takeover attempt last year and go it alone.

"After more than two years of missing expectations due to disappointing results and after rejecting a takeout offer from Mondelez, Hershey's management is under a fair degree of pressure this year to prove to the market that it can achieve above-peer returns as an independent company. We believe that it is set up to do exactly that over the next 12 months," equity analyst Robert Moskow wrote in a note to clients.

Strong confectionery sales in the U.S. last year, falling cocoa prices and a "more realistic outlook for growth," could mean the Street revises Hershey's earnings estimates higher in the upcoming quarters, Moskow said.