Hershey (HSY) could struggle to show a near-term positive inflection as investors shift focus to market share losses from cocoa prices, RBC Capital Markets said in a note Friday.

The report said the company's share of chocolate continues to trend downward from its COVID-era highs.

"The recent share losses are attributable to Hershey vs Mars price gaps, low repeats for innovation...and the inability to scale more premium versions of their largest brands," the note said.

The report said Mars has been the primary share gainer in chocolate candy, driven by widening price gaps, a more active innovation calendar, and strength in large-format pack sizes.

Hershey's innovation track record is mixed, and comparison will get harder in the second half, it added.

"If market shares continue to remain under pressure, we believe Hershey will need to spend more than expected," the note said.

RBC cut its price target to $206 from $212 and maintained its sector perform rating.

Price: 188.42, Change: +0.11, Percent Change: +0.06