March 11 (Reuters) - Goldman Sachs removed Hershey Co (HSY.N) from its conviction sell list but kept its "sell" rating on the stock, citing a lower chance of the chocolate maker missing near-term earnings estimates.
The brokerage had a conviction sell rating on the stock as it expected high commodity prices to pressure profit growth that could lead to a potential earnings miss for the company.
"We now see a reduced risk of a near-term earnings miss due to recent announcement of incremental cost savings and a decline in key commodities over the past month," analyst Judy Hong wrote in a note dated March 10.
At a consumer analyst conference held last month, the maker of Reese's peanut butter cups and Hershey kisses presented plans for cost savings in areas such as freight, logistics and procurement, the analyst said.
The brokerage also raised its earnings per share estimates on Hershey by 2 cents to $2.31 for 2010 and by 3 cents to $2.49 for 2011 to reflect the additional cost savings.
However, Goldman Sachs kept its "sell" rating on the stock citing potential for weakening chocolate sales, difficulty in increasing prices to offset higher commodities and slowing gross profit dollar growth.
"Long-term, we continue to see challenges to Hershey's competitive position as a U.S.-centric player in the global confectionary market."
Shares of the company closed at $41.50 Wednesday on the New York Stock Exchange. (Reporting by Abhishek Takle in Bangalore; Editing by Bijoy Koyitty)