BTIG Downgrades DermTech Inc. (DMTK) to Neutral

BTIG analyst Sung Ji Nam downgraded DermTech Inc. (NASDAQ: DMTK) from Buy to Neutral.

The analyst comments "After the market close, DermTech announced that it has initiated a formal strategic review process. DMTK will consider all strategic options, including an acquisition, merger, reverse merger, business combination, licensing, sale of assets, or other transaction. In addition, DMTK announced it is again reducing its workforce, this time by 56%, or by ~100 employees. We spoke to the company following its announcement. We learned that DMTK will retain a portion of its sales people, however it seems like DMTK is cutting a large number of its ~55-person direct salesforce (and it is making cuts across its entire business). Its lab will remain open to process customer orders, however, it's unclear how much demand will be generated from a smaller salesforce. We view the news as disappointing (since we like the company, flagship DermTech Melanoma Test, and management team) and we believe the announcement was made a bit prematurely (since DMTK had a cash runway into early 2025 prior to the new 56% workforce reduction), but we believe the decision was almost entirely driven by the current extremely difficult capital markets environment for micro-cap companies. DMTK indicated to us that it pursued a wide range of capital markets transactions and ran into various difficulties consummating any capital markets transaction. We think other labs are likely to show strategic interest in DermTech, particularly those who have commercial call points to dermatologists, and we would also not rule out interest from labs with large primary care sales forces, of which there are many. Since we lack visibility on the strategic alternative review process, and on any outcome, and we now lack visibility on the demand for its test with a reduced salesforce, we downgrade DMTK from a Buy rating to a Neutral. BTIG does not provide price targets for Neutral rated stocks."

For an analyst ratings summary and ratings history on DermTech Inc. click here. For more ratings news on DermTech Inc. click here.

Shares of DermTech Inc. closed at $0.59 yesterday.

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