Dean Foods Co.'s stock plunged 12% in active afternoon trade Tuesday, putting it on course for the biggest one-day decline since November 2010, after Morgan Stanley said Wal-Mart Stores Co.'s decision to develop milk processing capacity "is clearly an unfavorable development" for dairy products seller. Wal-Mart is Dean Foods' biggest customer, representing 16% of 2015 sales, according to FactSet. On Friday, Wal-Mart said it plans to establish a milk processing plant in Fort Wayne, Ind., with more than 200 employees, by the summer of 2017. Analyst Matthew Grainger said he believes the stores that will be affected by the move will represent "a meaningful portion" of Dean Foods' total volume. "In the mid term, [Dean Foods] will need to more aggressively manage its cost base to mitigate the anticipated volume deleverage," Grainger wrote in a note to clients. The stock has tumbled 15% amid a four-session losing streak. It has now lost 1.5% year to date, while the S&P 500 has edged up 0.3%.
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