The stock of chocolate maker Hershey Co. (NYSE:$HSY) is surging as the price of cocoa falls.
Cocoa is currently trading at $4,200 U.S. per tonne, its lowest level in two years. Cocoa's price hit a record high of $12,987 U.S. a tonne in December 2024 due to crop failures in West Africa.
But now, the cocoa crop in Africa has stabilized and cocoa's price has fallen sharply on signs of abundant global supplies and slack demand.
This has helped propel Hershey's stock sharply higher. Through six weeks of the year, HSY stock is up 26%.
The big move higher has Hershey's share price up nearly 50% in the past 12 months.
Hershey's stock had steadily declined in recent years as cocoa's price hit record levels, driving up the company's input costs and forcing it to raise prices on consumers.
But now, management at Hershey is forecasting better days ahead as cocoa's price retreats from its all-time high and steadily moves lower.
At the start of February, Hershey issued fourth-quarter financial results that beat Wall Street forecasts across the board.
The Pennsylvania-based company behind Reese's Peanut Butter Cups and Hershey Kisses reported earnings of $1.71 U.S. per share, well above the $1.40 U.S. consensus estimate.
Revenue came in at $3.09 billion U.S., up 7% from a year earlier, and topping Wall Street forecasts of $2.98 billion U.S.
Perhaps most encouraging, management forecast 4% to 5% sales growth for this year, and full-year earnings of $8.20 U.S. to $8.52 U.S., a 30% to 35% increase from 2025.
In their earnings call with analysts and media, management at Hershey singled out the declining cocoa prices as helping to reverse the company's fortunes.
