William Blair analyst John Kreger yesterday afternoon downgraded Diplomat Pharmacy to Market Perform from Outperform citing the company's "faltering" pharmacy benefit manager business. The analyst notes the company's revenue commentary for both 2018 and 2019 was below his model, as was adjusted EBITDA guidance for the coming year. Diplomat's new PBM business, CastiaRx, is not performing well and appears to be the culprit for the lower expectations, Kreger tells investors in a research note. With the stock down 54% from the high last July, the valuation appears "fairly reasonable," says the analyst. He now models for the PBM business to stabilize and deliver low-single-digit growth in 2020. Lake Street this morning also downgraded shares of Diplomat Pharmacy.