Hershey (HSY) outperformed in Q3 across all segments on robust non-seasonal consumption, RBC Capital Markets said in a Friday research report.

The company raised its fiscal year topline guidance but retained its EPS forecast, implying lower growth in Q4 compared with earlier expectations, according to the note.

In the salty snacks segment, volume saw benefits, but price was negatively impacted by the timing of customer programming. The international segment saw a 5-point benefit from shipment timing, but recorded a negative Q3 operating profit due to cocoa inflation as the segment is mostly cocoa-driven, analysts wrote.

In 2025, gross margin is expected to contract by 675 bps to 700 bps as higher sales and tariff improvements are offset by elevated supply chain costs and brand investments in Q4, the brokerage stated.

RBC now expects 2025 adjusted EPS of $5.92 from $5.82 earlier and a net sales growth of 3% from 2.2% previously. For 2026, it modelled a 2.2% net sales growth and EPS of $6.34.

RBC reiterated its sector perform rating on the stock and price target of $175 per share.

Price: 168.27, Change: -2.90, Percent Change: -1.69