KeyBanc Initiates Coverage on Diamond Foods (DMND) with a Buy
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KeyBanc initiates coverage on Diamond Foods, (Nasdaq: DMND) with a Buy rating and a price target of $32.
KeyBanc analyst says, "With only a 1% share of the broader snack market, DMND's growth potential within the snack aisle is largely untapped, in our view. We expect the Company to post 40% EPS growth on average over the next three years (FY09-FY11), driven by strong growth in its snack platform.
Specifically, we expect the snack business to grow much faster than the overall company and represent 40% of sales and over 60% of EBIT by FY11. If we are right, DMND will still only represent 8% of the overall snack nut market by FY11, implying strong potential for future growth. As for the commodity nuts business, we expect walnut prices to be 6% below historical levels over the next few years, which should benefit margins in that business."
Diamond Foods, Inc. (Diamond) is a branded food company specializing in processing, marketing and distributing culinary, in-shell and ingredient nuts and snack products. The Company’s products are sold in over 60,000 retail locations in the United States and in over 100 countries.
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