Hershey Co said sales and earnings growth would slow next year, as costs for ingredients remain high, sending its shares down 4 percent.

The company, whose shares have outperformed its peers this year, forecast 2012 sales and earnings growth in line with its long-term targets, which call for increases of 3 percent to 5 percent for sales and 6 to 8 percent for earnings.

Those rates are below what the maker of Reese's peanut butter cups, Twizzlers and Kit Kat bars has forecast for 2011. It said on Thursday that 2011 sales would increase about 7 percent, up from a prior forecast of 6 percent. It stood by its earnings growth target of up about 10 percent.

For 2012, the company said it expects the economic environment to remain challenging and that its costs for ingredients, which include cocoa and sugar, should remain high despite some easing on the spot futures markets.

According to Consumer Edge Research analyst Robert Dickerson, Hershey's targets imply earnings per share of about $2.83 for 2011 and $3.05 for 2012.

Analysts on average were expecting 2012 earnings of $3.12 per share, according to Thomson Reuters I/B/E/S.

As a result, investors may be reassessing the stock, Dickerson said.

If you put a bit more uncertainty on growth sustainability that you've seen over the past two years for Hershey, then the question becomes whether you still want to pay a 30 percent premium relative to the group, which is where the stock has been for the past two months, versus the 20 percent we saw at the beginning of this year, he said.

Hershey shares were down $2.61, or 4.4 percent, at $57.27 in afternoon trading on the New York Stock Exchange, while the Standard & Poor's 500 index was up 3.5 percent.

Through Wednesday's close, Hershey shares had gained 27 percent this year, outperforming the wider Dow Jones Food Producer's index , which rose 10 percent over the same period.

PRICES UP, VOLUME DOWN

Hershey's third-quarter net income was $196.7 million, or 86 cents per share, up from $180.2 million, or 78 cents per share, a year earlier.

Excluding one-time items, earnings were 84 cents per share.

Net sales rose 5 percent to $1.62 billion, due to price increases. Sales volume declined, as those price increases curbed demand. Foreign exchange rates lifted sales 0.6 percentage points.

Analysts on average were expecting earnings of 84 cents per share on sales of $1.62 billion, according to Thomson Reuters I/B/E/S.

Morningstar analyst Erin Lash said consumers were still spending on seasonal items like Halloween candy, but wondered whether they were cutting back on general treats, especially in the face of price increases taken to offset higher ingredient costs.

We've been talking about the fact, over the last couple quarters, that confectionary is an affordable luxury. I don't think that's necessarily changed, but price elasticity is something that we'll be paying attention to, Lash said, referring to how consumer demand shrinks along with price increases.

Like most packaged food and beverage makers, Hershey has raised prices on its products to offset soaring costs for ingredients such as cocoa and dairy. Yet a nearly 10 percent increase, announced in March, has outpaced the smaller increases more common in other food categories.

Consumers will not feel the full impact of that price increase until Easter, Hershey said.