Analysts Turn Bullish on Hershey—Is Pepsi the Next Value Play?

Consumer staples Hershey (HSY) and PepsiCo (PEP) are emerging as contrarian value plays amidst a growth-dominated market. Hershey is experiencing a re-rating, evidenced by a Goldman Sachs upgrade to Buy with a $222 target, a projected 75% increase in Q1 2026 EPS, and rising institutional interest. PepsiCo, currently down 7.2% YTD, presents an earlier-stage opportunity with robust fundamentals and an attractive 4.01% dividend yield, positioning it for potential future analyst re-evaluation.

Analysis

The consumer staples sector is being positioned as a source of contrarian value, with Hershey (HSY) and PepsiCo (PEP) presented as distinct opportunities in a market dominated by growth themes. Hershey is depicted as being in the early stages of a positive re-rating, supported by a significant Goldman Sachs upgrade to a 'Buy' with a $222 price target, which implies 16% upside and stands in direct opposition to the consensus 'Reduce' rating and its associated $173.89 target. This bullish outlier view is further substantiated by a forecasted 75% EPS jump to $2.11 for Q1 2026 and evidence of institutional accumulation, such as State Street's recent stake increase to $1.2 billion. In contrast, PepsiCo is framed as an earlier-stage value play, currently out of favor with a 7.2% year-to-date decline. Its appeal is anchored in strong fundamentals and a compelling 4.01% dividend yield, offering immediate income while investors await a potential sentiment shift similar to Hershey's. However, it is critical to note a key caveat: the consensus analyst rating for Hershey remains a 'Reduce', and the stock was explicitly excluded from a separate list of top analyst picks, signaling that this bullish thesis is not yet widely held.

Key Decisions for Investors

• For Hershey, investors should weigh the bullish catalyst of a contrarian Goldman Sachs upgrade and a 75% EPS growth forecast against the prevailing bearish consensus 'Reduce' rating, recognizing the risk and reward of this divergence.
• Consider PepsiCo as an earlier-stage value and income opportunity, leveraging its 4.01% dividend yield for immediate returns while noting its performance currently lacks a clear re-rating catalyst.
• Acknowledge that this is a contrarian thesis on a sector rotation into consumer staples, which carries the risk that momentum-driven market trends will continue to suppress a re-rating for these names.