On Wednesday, BTIG adjusted its outlook on DermTech Inc. (NASDAQ:DMTK), decreasing the price target to $2.00 from the previous $4.00, while continuing to support the stock with a Buy rating. The revision follows DermTech's recent quarterly financial report, which revealed a decrease in the company's cash balance, now estimated to sustain operations for just under a year.
The report also noted the absence of a significant new national commercial payor partnership and the lack of a revenue forecast for 2024.
DermTech, known for its non-invasive melanoma test, has seen its stock price decline post-earnings. The company is currently prioritizing average selling price (ASP) growth over volume expansion, a strategy that has yet to demonstrate its longevity. Despite these challenges, DermTech has achieved a record-high revenue mix from Medicare, which is considered a favorable payor for the company's services.
The firm has been focusing on maximizing revenue from existing payor coverage areas, a strategy described as "doing more with less." This approach has been part of DermTech's newer strategy aimed at driving revenue growth and enhancing volume from secured payor sources. The company's efforts in this direction have been recognized as it continues to build commercial payor coverage and ASPs.
In light of the recent developments, BTIG has revised its revenue projections for DermTech, leading to the lowered price target. The firm acknowledges the unique position of DermTech in the market with its innovative melanoma testing solution and remains optimistic about the company's potential, as indicated by the retained Buy rating. Still, the tempered near-term expectations for volume growth have necessitated adjustments to the financial outlook for DermTech.
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