Diamond Foods slides on report of criminal inquiry

Stock Market Predictions

(Global Markets) - Shares of Diamond Foods Inc (DMND.O) fell as much as 11 percent on a report that federal prosecutors have launched a criminal inquiry into the company's walnut payments.

The Wall Street Journal said on Thursday that the Justice Department has launched a criminal inquiry into the snack maker's accounting of payments to walnut growers while it was in talks to buy Pringles from Procter & Gamble (PG.N).

"It is prudent to go to the sidelines until the audit committee investigation is complete ... and we have more clarity on the outcome of these additional inquiries," KeyBanc Capital Markets analyst Akshay Jagdale wrote in a note to clients.

He downgraded the stock to "hold" from "buy."

Shares of the company were down 9 percent at $30.03 in early trade on the Nasdaq, after touching a two-week low of $29.36.

(Reporting by Arpita Mukherjee in Bangalore; Editing by Unnikrishnan Nair)