AITP Clipped on Scandal

American Italian Pasta Co (AITP) shares fell nearly 6 percent on Wednesday, after two former top executives pleaded guilty to misleading investors and increasing its share price through a series of accounting malpractices. This will definitely hurt the company's goodwill as former CEO Timothy Webster and ex-CFO Warren Schmidgall face up to five years in prison and a large fine. In addition, American Italian Pasta will have to pay a $7.5 million fine related to the fraud and restate financial statements for five years.

However, the big question is whether investors will eventually forgive AITP for making an effort to correct years of wrongdoing. Shares of the company are up 86% year-to-date and trading close to their year-high of $14.50. The stock soared in August, after the company posted its first timely financial report for the nine-month period in more than three years. Analysts are positive on the company's future, pegging their EPS estimates for the full year at $1.05. Moreover, with an average price target of $24, they believe there is still some upside left in this stock.

Read the full analyst report on AITP