Zacks Investment Research upgraded shares of Diamond Foods, Inc. (DMND) from UNDERPERFORM to NEUTRAL on June 27, 2013, with a target price of $21.00.
We have upgraded our long-term recommendation on Diamond Foods to Neutral based on its strong bottom-line results for third-quarter fiscal 2013. The company is progressing well with its cost savings endeavors and operational efficiencies. We believe that better price realization, reduction of underperforming SKUs and lower dependency on discounting would gradually facilitate the company to put itself back on the growth path. However, the near term headwinds cannot be ignored with fourth quarter sales projected to decline at rate faster than the third quarter. Further, we believe that the challenges related to procuring walnut supplies and mending Diamond Food's ties with growers are denting the company's performance. Moreover, Diamond Food's high dependence on few retailers might prove unfavorable in case there is a hitch in business negotiations.
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