Diamond Reports Strong 1Q

BB&T Capital Markets has published a research report on Diamond Foods, Inc. DMND after the company report a strong 1Q. In the report, BB&T writes "We believe that the company's growth strategy is evident, and thus, working. We estimate that Emerald grew somewhere in the mid 20's for the quarter, afforded by volume gains in both measured and non-measured channels. Very simply, its spending plan may reduce near-term earnings, but it enables the company to improve long-term growth through incremental penetration and new account/channel wins. Its cross-brand marketing effort is also helping. Kettle is benefitting from smart store placements along with new distribution and we expect this to continue as the company ramps production capacity and furthers its penetration into new markets. We believe that the competitive environment is in the process of improving (both domestically and abroad) and that entrée into mass, c-store, and drug-type outlets will further bolster the top line. Brand support should deflate earnings somewhat near-term, however, we expect this to drive incrementally larger growth and improved margins further out. Continued double-digit growth in Emerald is evidence of these positive strategic effects, in our opinion." BB&T reiterates its Buy rating and $52 price target. Diamond Foods, Inc. closed yesterday at $45.82.