Nov 15 Shares of Diamond Foods Inc fell as much as 25 percent and some brokerages slashed their price targets for the maker of Emerald nuts and Kettle chips, after it restated financial results and wiped $56.5 million off profits.
Diamond shares fell to a six-year low of $14.50 on heavy volumes, making it one of the biggest percentage losers on the Nasdaq, before recovering to $15.40.
On Wednesday, Diamond restated its financial results for fiscal years 2010 and 2011 and posted a net loss for the first three quarters of 2012 after it improperly accounted for payments to walnut farmers.
"The restatement was the first step on the road to recovery and, based on the choppy snack results and plummeting walnut volumes, it looks like the road will be longer than expected," analyst William B Chappell of SunTrust Robinson Humphrey said.
Diamond has been battling to stay listed on the Nasdaq after the scandal, which claimed the jobs of top executives and scuttled its plan to buy Pringles potato chips.
It turned to discounting in the midst of the scandal but is now trying to rebuild premiums for its snack brands.
"(Diamond) continues to make efforts to repair grower relationships to secure walnuts for its culinary and international businesses, though supply likely will remain tight in the near-to-medium term," Kenneth Zaslow of BMO Capital Markets wrote in a note.
BMO cut its price target on the stock to $13 from $18 while Barclays Capital halved its price target on the stock to $12 from $25.
"The (company) is clearly in rebuilding mode and while a new strategy for the snack business might be the right approach, we believe that it will also continue to put pressure on the growth outlook," analysts at Jefferies & Company wrote in a note titled 'Restated ... Not Reassured'.
It kept its price target for the stock unchanged at $27. (Reporting by Aditi Shrivastava in Bangalore)