- Canaccord Genuity reiterates its Buy rating on Castle Biosciences Inc CSTL but lowers the price target from $60 to $40, citing lower DecisionDxSCC revenue and an increased discount rate.
- Novitas (a Medicare Administrative Contractor, posted its future effective Local Coverage Determination (LCD) on June 2, 2023 (effective July 17, 2023), stating that Castle's DecisionDx-SCC (DDSCC) and DecisionDx-Melanoma (DD-Mel) do not meet the criteria necessary for coverage.
- DecisionDx-Melanoma will maintain Medicare reimbursement, as the Palmetto/ Noridian LCDs remain unchanged.
- The analyst notes that Castle could have the LCD retracted, convince Novitas to reconsider the data (believes the MAC misunderstood it) and/or may appeal the decision.
- The company expects to reach a solution in roughly one year.
- The analyst says that while the move is not positive, the company still has multiple paths to improve the situation.
- It says the shares do not reflect CSTL's attractive long-term revenue growth and margin expansion potential.
- Price Action: CSTL shares are up 24.40% at $14.51 on the last check Tuesday.
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