Hershey (NYSE:HSY) shares fell nearly 2% pre-market today after Jefferies analysts downgraded the company to Underperform from Hold, lowering their price target to $163 from $184.

The analysts explained that Hershey is facing significant challenges, with the company projecting mid-single-digit price increases in its North American confectionery segment for 2025. This is expected to widen the price gap between Hershey’s products and other snack categories, at a time when consumers are opting for more affordable snacks. While Hershey is focusing on holiday-related sales, consumer participation in these events has diminished compared to pre-pandemic levels. Additionally, everyday chocolate purchases are declining, especially among low-income consumers, adding pressure to various segments of Hershey's chocolate portfolio. The analysts noted that Hershey faces numerous headwinds with limited upside potential, increasing the likelihood of downward earnings revisions.