Diplomat Pharmacy Bull Downgrades Stock, Warns Of 15% Downside

J.P. Morgan's Lisa C. Gill downgraded the rating on

from Overweight to Neutral, while lowering the price target from $52 to $30. On February 29, the company reported robust 4Q15 results, with the adjusted EPS ahead of the consensus and the estimate. However, Gill pointed out the initial FY16 guidance was below expectations, with the midpoint of the adjust EBITDA and EPS guidance range coming in below the consensus. "We are having a difficult time bridging the 2016 outlook, which implies a deceleration in the organic adjusted EBITDA growth rate, despite what we generally view as a strong fundamental backdrop," Gill stated. Although management remained bullish, the analyst stated that it was unclear whether the guidance was merely reflective of a conservative outlook. "Further, we believe broader industry issues, such as the political environment and a slowdown within the hepatitis C category, are likely to remain overhangs in the near term," Gill mentioned. Although the FY16 revenue estimate has been raised, the FY16 adjusted EBITDA and EPS estimates have been lowered. For FY17, the revenue estimate is largely unchanged, while the adjusted EBITDA and EPS estimates have been lowered.