DermTech, Inc. (DMTK) shares ended the last trading session 11.1% higher at $45.74. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 7.5% loss over the past four weeks.

The stock recorded a strong price increase on possibility that the health insurance giant Cigna will begin covering its melanoma detection test -- the pigmented lesion assay (PLA). If the speculations are true, Cigna will become the first national carrier to cover the PLA with the move. Almost the entire value for DermTech is tied to forecasts for its PLA – an adhesive patch offering noninvasive way of detecting melanoma. The insurance coverage offered by Cigna represents a significant step forward for the technology.

Price and Consensus

This company is expected to post quarterly loss of $0.47 per share in its upcoming report, which represents a year-over-year change of +11.3%. Revenues are expected to be $2 million, up 28.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For DermTech, Inc., the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on DMTK going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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