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

Key Points

• Value investors find opportunities in overlooked sectors, and consumer staples fit the bill in today’s tech-driven market.
• Hershey stock has gained momentum with an analyst upgrade and earnings growth outlook, signaling a shift in sentiment.
• Pepsi remains undervalued, offering a strong dividend yield and long-term upside potential as analysts may eventually re-rate the stock.

Value investing means looking where others aren’t. The strategy requires going against the grain. To find stocks that have been overlooked, you have to bet on fundamentals that the crowd has yet to recognize.

What does that mean in today's momentum-driven market, dominated by technology and growth themes? That consumer staples have been left in the shadows. And this has created opportunities for investors willing to act before sentiment turns. 

Within this backdrop, The Hershey Company NYSE: HSY and PepsiCo Inc. NASDAQ: PEP stand out as prime examples of staples that are beginning to attract fresh attention as undervalued opportunities.

Hershey Stock: Analyst Upgrade Signals a Shift

Wall Street analysts have given HSY stock a consensus Reduce rating and a $173.89 price target, implying an 8% downside from where the stock trades today.

However, Goldman Sachs analyst Leah Jordan went a different direction by upgrading Hershey to a Buy with a $222 target, implying 16% upside. That’s one of the hardest things to do, but it can also be the most rewarding.

Institutional investors are already taking notice, with State Street recently boosting its Hershey stake to $1.2 billion, making up 3.5% of the company. Meanwhile, analysts forecast earnings per share of $2.11 for Q1 2026, a 75% jump from today’s $1.21. That kind of earnings acceleration typically drives stock prices higher.

Aiding these bullish prospects, the MarketBeat consensus reflects analysts forecasting $2.11 in earnings per share (EPS) for Hershey’s first quarter of 2026, representing a 75% increase from today’s reported $1.21 EPS.

As most investors know, where EPS growth goes, so does the stock price; therefore, the Hershey momentum seems justified for acceleration.

Pepsi Stock: Today’s Weakness, Tomorrow’s Opportunity

If Hershey represents the early stages of a value stock re-rating, Pepsi might be where Hershey was a few quarters ago—ignored despite strong fundamentals. Trading at just 73% of its 52-week high and down 7.2% year-to-date, Pepsi has fallen out of favor with analysts and investors.

But this is exactly what makes it interesting as a contrarian play. Analysts are unlikely to upgrade a stock with weak price action, but fundamentals often force sentiment to change. Pepsi’s powerful brand, financial strength, and dividend stability provide a solid foundation for that eventual shift.

This positioning could change significantly for Pepsi, especially if Wall Street analysts begin to raise their ratings and valuation targets as they have for Hershey.

At current levels, Pepsi pays out $5.69 per share annually, a dividend yield of 4%. That’s higher than U.S. Treasury bonds and ahead of inflation, offering investors immediate returns while waiting for the stock’s momentum to turn.