UPDATE: KeyBanc Capital Markets Downgrades Diamond Foods to Hold

KeyBanc Capital Markets has published a research report on Diamond Foods

and has downgraded the company from Buy to Hold upon investigations being conducted by Federal Prosecutors to discover whether financial practices at the company involved criminal fraud. In the report, KeyBanc writes, "Despite our downgrade, we continue to believe that the Company's audit investigation will reveal that DMND has properly accounted for the various payments it makes to its growers. Furthermore, we believe, even in the worst case scenario, the stock is worth at least $44 (break-up value). Said differently, although we continue to believe DMND's management team will be vindicated and think the stock is undervalued, it is impossible to defend the stock when so many high profile agencies are investigating/inquiring into the Company's practices and the management team has its hands tied." KeyBanc Capital Markets has removed its $76 price target on Diamond Foods, which is currently trading $2.48 from yesterday's $33.13 closing price.