Leerink ups Diplomat Pharmacy to OP; PT to $23


Leerink upgraded Diplomat Pharmacy (NYSE:DPLO) to “outperform” and raised its price target to $23 from $20 after recent investor meetings with the company’s management and after considering several new developments. The stock closed at $18.75 on Dec. 8.

Diplomat Pharmacy is the largest independent provider of specialty pharmacy services in the U.S., dispensing drug in all 50 states.

“We are more positive on the stock for several reasons,” writes analyst David Larsen.

Among other things, he said direct and indirect remuneration fee exposure is reduced, given new proposed rules from the Centers for Medicare & Medicaid Services. “We like Diplomat's new pharmacy benefit management (PBM) strategy, which allows the firm to go on the offensive and not be a price-taker,” he added.

“Longer-term, we believe that [Diplomat] CEO, Phil Hagerman, is becoming a more willing seller and it is very unusual for public stand-alone PBMs and specialty pharmacies to remain independent,” Mr. Larsen said.

In addition, he said sentiment on the stock is improving, and “we also believe that adding PBM capabilities is a significant positive.”