Brokerages cut PT on Hershey, Mondelez as cocoa prices soar

** Brokerages trim PT on chocolate makers Hershey HSY and Mondelez MDLZ as cocoa prices surge

** Piper Sandler trims PT on HSY to $179 from $200; Jefferies cuts PT to $191 from $205

** Jefferies estimates cocoa makes up ~20% of cost of goods sold for HSY, but only ~10% for MDLZ

** HSY's earnings are more sensitive to variations in cocoa prices and will likely require more pricing increases to offset higher costs - Jefferies

** Cocoa prices have surged over past year, doubling in value and hitting record highs, driven by dwindling supplies

** Consumers are currently stretched and suffering pricing fatigue, and HSY is mindful not to push pricing too far near-term - Piper Sandler

** Expect further incremental pricing to cover higher costs for HSY, as it is fully contracted for 2024, and to take ~5% pricing in 2025 - Piper Sandler

** Jefferies also slashes PT on Cadbury-parent Mondelez to $82 from $88, retains "buy" rating

** Last week, at least 3 brokerages cut PT on MDLZ owing to weaker U.S. demand and cocoa prices

** MDLZ and HSY shares up about 1% premarket

** HSY down 19.5% in 2023, while MDLZ up 8.7%