Salomon Raises Hershey Foods to 'Buy'

Analyst Jaine Mehring upgraded on valuation. The candy manufacturer's stock price has fallen 16% from its $72 high earlier this year

Salomon Smith Barney upgraded Hershey Foods (HSY ) to buy from neutral.

On Tuesday the candy manufacturer reaffirmed it expects 2002 operating earnings per share to meet its 9%-11% growth objective.

Analyst Jaine Mehring says her upgrade is due to a 16% price pullback from a $72 high earlier in the year. She also cited a modest increase in estimates as cost structure improvements were tracking ahead of her expectations.

She raised her $3.10 2002 EPS estimate to $3.13, and upped her $3.35 2003 estimate to $3.40 on better cost structure and efficiencies. Mehring has a $70 target. she notes risks include market instability, competition and cocoa costs.

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