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Castle Biosciences (CSTL)
NASDAQ:CSTL
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Castle Biosciences (CSTL) AI Stock Analysis

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CSTL

Castle Biosciences

(NASDAQ:CSTL)

Rating:64Neutral
Price Target:
$17.50
▲(7.23%Upside)
Castle Biosciences achieves a solid overall score driven by strong financial performance and positive earnings call insights. Technical analysis indicates bearish momentum, and valuation concerns due to a high negative P/E ratio and lack of dividend yield. Notable strengths in financial stability and strategic growth initiatives offer resilience amidst market challenges.
Positive Factors
Market Position
Castle Biosciences is seen as a leading skin cancer diagnostics company with a growing position in gastrointestinal cancer diagnostics.
Strategic Partnerships
Castle Biosciences enters a collaboration and license agreement with SciBase Holding AB to develop a diagnostic test for atopic dermatitis.
Negative Factors
Growth Strategy Risks
There is material risk to the company executing on its growth strategy.
Reimbursement Uncertainty
There is uncertainty regarding the SCC reimbursement status, which could impact CSTL's profitability.

Castle Biosciences (CSTL) vs. SPDR S&P 500 ETF (SPY)

Castle Biosciences Business Overview & Revenue Model

Company DescriptionCastle Biosciences, Inc., a commercial-stage diagnostics company, focuses to provide diagnostic and prognostic testing services for dermatological cancers. Its lead product is DecisionDx-Melanoma, a multi-gene expression profile (GEP) test to identify the risk of metastasis for patients diagnosed with invasive cutaneous melanoma. The company also offers DecisionDx-UM test, a proprietary GEP test that predicts the risk of metastasis for patients with uveal melanoma, a rare eye cancer; DecisionDx-SCC, a proprietary 40-gene expression profile test that uses an individual patient's tumor biology to predict individual risk of squamous cell carcinoma metastasis for patients with one or more risk factors; and DecisionDx DiffDx-Melanoma and myPath Melanoma, a proprietary GEP test to diagnose suspicious pigmented lesions. It offers test services through physicians and their patients. The company was founded in 2007 and is headquartered in Friendswood, Texas.
How the Company Makes MoneyCastle Biosciences generates revenue primarily through the sale of its proprietary diagnostic tests to healthcare providers, hospitals, and laboratories. The company earns money by charging fees for each test conducted, which are reimbursed by insurance companies, Medicare, and other third-party payers. Key revenue streams include their DecisionDx-Melanoma test, DecisionDx-SCC, and DecisionDx-UM, among others. Castle Biosciences also forms strategic partnerships with biopharmaceutical companies to collaborate on the development of new tests and to expand its product offerings. The company's growth is driven by the adoption of its tests, expansion into new markets, and ongoing research and development efforts to enhance its test portfolio.

Castle Biosciences Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: -12.96%|
Next Earnings Date:Aug 04, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant revenue growth and strategic acquisitions, particularly the acquisition of Previse and the strong performance of TissueCypher. However, challenges were noted in gross margin decline, discontinuation of IDgenetix, and reimbursement issues for DecisionDx-SCC. Despite these challenges, the positive developments appear to outweigh the negatives.
Q1-2025 Updates
Positive Updates
Revenue Growth
Revenue grew by 21% to $88 million, and test report volume for core revenue drivers increased by 33% compared to the first quarter of 2024.
Strong Balance Sheet
The company has a strong balance sheet with $275 million in cash, cash equivalents, and marketable investment securities.
Previse Acquisition
Castle Biosciences signed a definitive agreement to acquire Previse, enhancing its position in the gastrointestinal space.
TissueCypher Growth
TissueCypher test reports grew by 117% year-over-year, delivering 7,432 test reports in the first quarter of 2025.
DecisionDx-Melanoma Milestone
DecisionDx-Melanoma surpassed 200,000 test orders since its launch.
Negative Updates
Gross Margin Decline
Gross margin during the first quarter of 2025 was 49.2% compared to 77.9% in the first quarter of 2024, impacted by a one-time adjustment related to the discontinuation of IDgenetix.
IDgenetix Discontinuation
The company decided to discontinue the IDgenetix test effective May 2025 due to market changes and resource allocation focus.
DecisionDx-SCC Reimbursement Challenge
The Novitas Local Coverage Determination policy included noncoverage language for DecisionDx-SCC, effective April 24, 2025.
Increased Operating Expenses
Total operating expenses rose to $115.9 million in the first quarter of 2025 compared to $78.4 million for the same period in 2024.
Company Guidance
During the Castle Biosciences First Quarter 2025 Conference Call, the company reported a 21% revenue increase to $88 million, driven by a 33% rise in test report volume compared to the same period in 2024. The company highlighted a strong balance sheet with $275 million in cash, cash equivalents, and marketable investment securities. Castle Biosciences announced the acquisition of Previse to strengthen its position in the gastrointestinal space and reported that its DecisionDx-Melanoma test surpassed 200,000 orders. Additionally, DecisionDx-SCC delivered 4,375 test reports in Q1 2025 and TissueCypher saw a 117% growth in test reports year-over-year. The company also raised its total revenue guidance for 2025 to $287-$297 million. Adjusted gross margin was reported at 81.2%, and the company experienced a net loss of $25.8 million for the quarter.

Castle Biosciences Financial Statement Overview

Summary
Castle Biosciences shows strong revenue growth with a significant improvement in profitability and cash flow metrics. The low debt levels and robust equity base provide stability and potential for growth.
Income Statement
85
Very Positive
Castle Biosciences shows strong revenue growth with a 51.1% increase from 2023 to 2024, indicating robust market demand. Gross Profit Margin is stable at approximately 100%, demonstrating effective cost management. Net Profit Margin improved significantly to 5.5% in 2024 from a negative margin in 2023, reflecting enhanced profitability. Both EBIT and EBITDA Margins turned positive, indicating improved operational efficiency.
Balance Sheet
78
Positive
The company maintains a healthy Equity Ratio of 85.8%, suggesting a strong capital structure with low reliance on debt. The Debt-to-Equity Ratio is favorable at 0.06, indicating low financial leverage. Return on Equity improved to 4.0% in 2024, a positive turnaround from previous losses, showing better returns on shareholder investments.
Cash Flow
92
Very Positive
Castle Biosciences' Free Cash Flow turned positive in 2024, indicating improved cash management and operational efficiency. The significant Free Cash Flow Growth Rate from a negative base in 2023 highlights a strong recovery. The Operating Cash Flow to Net Income Ratio is robust at 3.56, reflecting effective cash generation from operations.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue332.07M219.79M137.04M94.08M62.65M
Gross Profit271.86M174.81M105.03M78.26M52.96M
EBITDA38.14M-45.02M-58.34M-36.60M-7.09M
Net Income18.25M-57.47M-67.14M-31.29M-10.28M
Balance Sheet
Total Assets531.24M453.34M447.33M462.57M439.33M
Cash, Cash Equivalents and Short-Term Investments293.13M243.10M258.63M329.63M409.85M
Total Debt26.34M15.34M13.31M8.08M0.00
Total Liabilities75.40M62.07M48.18M50.83M23.64M
Stockholders Equity455.83M391.27M399.15M411.74M415.69M
Cash Flow
Free Cash Flow36.54M-19.25M-47.29M-22.47M5.11M
Operating Cash Flow64.87M-5.63M-41.66M-18.98M9.87M
Investing Cash Flow-50.14M-16.18M-166.54M-66.66M-4.75M
Financing Cash Flow6.14M-2.30M1.51M5.42M305.89M

Castle Biosciences Technical Analysis

Technical Analysis Sentiment
Negative
Last Price16.32
Price Trends
50DMA
17.98
Negative
100DMA
18.95
Negative
200DMA
24.13
Negative
Market Momentum
MACD
-0.49
Positive
RSI
35.54
Neutral
STOCH
10.91
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSTL, the sentiment is Negative. The current price of 16.32 is below the 20-day moving average (MA) of 19.02, below the 50-day MA of 17.98, and below the 200-day MA of 24.13, indicating a bearish trend. The MACD of -0.49 indicates Positive momentum. The RSI at 35.54 is Neutral, neither overbought nor oversold. The STOCH value of 10.91 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CSTL.

Castle Biosciences Risk Analysis

Castle Biosciences disclosed 74 risk factors in its most recent earnings report. Castle Biosciences reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Castle Biosciences Peers Comparison

Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
64
Neutral
$471.20M30.59-1.20%38.43%86.19%
57
Neutral
$1.34B-62.22%30.47%-26.63%
56
Neutral
$516.56M-25.73%33.86%64.34%
56
Neutral
$567.93M-51.25%15.57%31.82%
52
Neutral
$567.16M-3.61%1.71%76.00%
52
Neutral
$7.46B-0.04-63.82%2.49%16.43%<0.01%
43
Neutral
$423.09M-13.84%7.38%60.45%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CSTL
Castle Biosciences
16.80
-2.51
-13.00%
LAB
Standard BioTools
1.45
-0.89
-38.03%
MYGN
Myriad Genetics
4.74
-23.11
-82.98%
FLGT
Fulgent Genetics
18.88
-4.11
-17.88%
PSNL
Personalis
6.76
3.90
136.36%
GRAL
GRAIL Inc
40.88
25.04
158.08%

Castle Biosciences Corporate Events

Executive/Board ChangesShareholder Meetings
Castle Biosciences Holds Annual Stockholders Meeting
Neutral
May 23, 2025

On May 22, 2025, Castle Biosciences held its annual meeting of stockholders, where key decisions were made. Stockholders elected three Class III Directors to serve until 2028, ratified KPMG LLP as the independent accounting firm for 2025, approved executive compensation, and amended the company’s certificate of incorporation to limit officer liability. These decisions reflect the company’s ongoing efforts to strengthen governance and operational frameworks.

The most recent analyst rating on (CSTL) stock is a Buy with a $34.00 price target. To see the full list of analyst forecasts on Castle Biosciences stock, see the CSTL Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Castle Biosciences Reports 21% Revenue Increase in Q1 2025
Positive
May 5, 2025

On May 5, 2025, Castle Biosciences reported a 21% increase in Q1 2025 revenue to $88 million compared to the same period in 2024, driven by a 33% rise in test reports for core products. The company raised its full-year revenue guidance to $287-297 million, reflecting strong growth and successful execution in its test portfolio. A significant milestone was achieved with over 200,000 orders for DecisionDx-Melanoma, which has been shown to improve patient survival rates. The company also announced the discontinuation of the IDgenetix test offering, effective May 2025, impacting its financials with a net loss of $25.8 million for the quarter.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 19, 2025