dplo

Diplomat Pharmacy Inc (NYSE:DPLO) investors are having a rough after the company reduced its outlook for 2016 and provided a preliminary outlook for 2017 that was well below the Street expectations.

Diplomat reported adjusted EPS of $0.21 which compares to consensus of $0.24. Total revenue of $1.181 billion was below consensus of $1.258 billion and adjusted EBITDA of $22.6 million was well below consensus of 33 million.

Diplomat shares reacted to the disappointing earnings, plunging nearly 40% in Thursday’s trading session.

Phil Hagerman, CEO and Chairman of Diplomat, commented “We are disappointed with our third quarter results, which were significantly impacted by the softness in the hepatitis C business nationwide, as well as by DIR fees. The methodology and transparency around how PBMs are applying these DIR fees changed materially in 2016, and while we cannot reverse the impact they had on this quarter, we are working with our partners in the specialty pharmacy industry and with legislators to achieve an amicable solution to this problem.”

“Despite the pressure we felt during the third quarter, our largest therapeutic category, oncology, continued to lead our growth. Driven by strong trends such as limited distribution, our oncology business increased 57% year over year, and 36% on an organic basis. We also have confidence in Diplomat’s future prospects as we see continued growth in the robust drug development pipeline, a number of early wins from our strategy of marketing directly to payors and health plans, and our ability to make strategic acquisitions in the core specialty pharmacy industry, as well as in expanding complementary service areas.”

On the ratings front, Diplomat has been the subject of a number of recent research reports. In a report released today, Avondale analyst Greg Bolan downgraded DPLO to Hold. Separately, Raymond James’ John Ransom downgraded the stock to Hold.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Greg Bolan and John Ransom have a yearly average return of 9.3% and 19% respectively. Bolan has a success rate of 61% and is ranked #531 out of 4165 analysts, while Ransom has a success rate of 67% and is ranked #120.

The street is mostly Neutral on DPLO stock. Out of 8 analysts who cover the stock, 7 suggest a Hold rating and one recommends to Buy the stock. The 12-month average price target assigned to the stock is $21.67, which represents a potential upside of 56% from where the stock is currently trading.

Diplomat Pharmacy, Inc. operates as an independent specialty pharmacy in the United States. The company stocks, dispenses and distributes prescriptions for various biotechnology and specialty pharmaceutical manufacturers. It focuses on improving the lives of patients with complex chronic diseases. The company offers a broad range of innovative solutions to address the dispensing, delivery, dosing and reimbursement of clinically intensive, high-cost specialty drugs.