tiprankstipranks
Trending News
More News >
Castle Biosciences (CSTL)
NASDAQ:CSTL
US Market
Advertisement

Castle Biosciences (CSTL) AI Stock Analysis

Compare
445 Followers

Top Page

CSTL

Castle Biosciences

(NASDAQ:CSTL)

Rating:59Neutral
Price Target:
$23.50
▼(-0.25% Downside)
Castle Biosciences' overall stock score reflects a mixed outlook. The most significant factor is the company's financial performance, which shows operational challenges and negative profitability. Technical analysis indicates strong momentum, but valuation concerns persist due to ongoing losses. The earnings call provided a positive outlook with raised revenue guidance and strategic progress, balancing some of the financial weaknesses.
Positive Factors
Growth Drivers
TissueCypher is the main growth driver for CSTL, with volumes 25% above consensus expectations.
Market Position
Castle Biosciences' shares remain attractive due to the company's stable core business and promising early-stage assets.
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
There is material risk to the company executing on its growth strategy.
Product Discontinuation
CSTL will no longer benefit from DDx-SCC revenue.

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 diagnostic tests and associated services. The company charges healthcare providers for its genomic testing services, which are typically reimbursed by insurance companies, including Medicare and various private insurers. Key revenue streams include the sales of its flagship products such as the DecisionDx-Melanoma and DecisionDx-SCC tests, which are designed to assess the risk of cancer recurrence and guide treatment options. Additionally, Castle Biosciences has established partnerships with various healthcare organizations and research institutions to enhance its test development and market reach, further contributing to its revenue growth. Factors such as the increasing demand for personalized medicine and advancements in genomic testing technology also play a significant role in the company's earnings.

Castle Biosciences Earnings Call Summary

Earnings Call Date:Aug 04, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 10, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant growth in test volumes and successful collaborations, but also highlighted challenges in dermatological test revenues and reimbursement issues. Despite these challenges, Castle Biosciences raised its revenue guidance for the year, indicating optimism about future growth.
Q2-2025 Updates
Positive Updates
Strong Revenue and Test Volume Growth
Castle Biosciences reported revenue of $86.2 million with a total test report volume of 26,574, representing a 33% year-over-year growth for core revenue drivers compared to Q2 2024.
DecisionDx-Melanoma Test Success
The DecisionDx-Melanoma test saw a sequential increase of approximately 16% compared to Q1 2025 and a year-over-year increase of 4%. The test was associated with a 32% reduction in mortality risk in a real-world cohort.
Significant Growth in TissueCypher Test
TissueCypher test reports increased to 9,170 in Q2 2025 from 4,782 in Q2 2024, marking a 92% year-over-year growth.
Strong Financial Position
Castle ended the quarter with $275.9 million in cash, cash equivalents, and marketable securities, supporting continued investment in growth initiatives.
Raised Revenue Guidance
For total revenue in 2025, guidance was raised to $310 million to $320 million, up from the previous range of $287 million to $297 million.
Successful Collaborations and Pipeline Developments
Castle entered into a collaboration with SciBase and reported success in its internally developed atopic dermatitis test, expected to launch by the end of 2025.
Negative Updates
Revenue Decline in Dermatological Tests
Net revenues decreased by $0.8 million or 1% compared to Q2 2024, mainly due to a $12.5 million decrease in revenue from dermatological tests, notably the DecisionDx-SCC test.
DecisionDx-SCC Reimbursement Challenges
The DecisionDx-SCC test faced reimbursement challenges due to a Novitas noncoverage policy, though a reconsideration request was submitted and accepted as valid.
Decreased Gross Margins
Gross margin during Q2 2025 was 77.3% compared to 80.7% in Q2 2024. Adjusted gross margin decreased to 79.5% from 83.2% in the same period.
Lower Net Income and EBITDA
Net income for Q2 2025 was $4.5 million compared to $8.9 million in Q2 2024. Adjusted EBITDA was $10.4 million, down from $21.5 million in Q2 2024.
Company Guidance
During the Castle Biosciences' Q2 2025 earnings call, the company provided several key metrics and guidance updates. Castle reported revenues of $86.2 million for the second quarter, with a total test report volume of 26,574, marking a 33% year-over-year increase in core revenue-driving tests. The company maintained strong gross margins and ended the quarter with $275.9 million in cash, cash equivalents, and marketable securities. Castle highlighted significant growth in their DecisionDx-Melanoma test, with 9,981 reports, a sequential increase of 16% from Q1 2025 and a 4% year-over-year increase. The company reiterated expectations for high single-digit volume growth for this test in 2025. Castle also noted a 92% year-over-year growth in their TissueCypher test volume to 9,170 reports. For the full year, Castle raised their total revenue guidance to $310-$320 million, up from the previous $287-$297 million. Additionally, Castle discussed strategic progress, including their collaboration with SciBase and developments in atopic dermatitis diagnostics, expecting to launch a new test by the end of 2025.

Castle Biosciences Financial Statement Overview

Summary
Castle Biosciences shows a mixed financial performance. The income statement reflects declining revenue growth and negative net profit margins, indicating losses. The balance sheet is stable with low leverage, but profitability metrics are weak. Cash flow generation is positive but insufficient to cover net losses, highlighting operational challenges.
Income Statement
45
Neutral
Castle Biosciences shows a mixed performance in its income statement. The TTM data indicates a decline in revenue growth rate by 23.5%, which is concerning. The gross profit margin remains strong at over 80%, but the net profit margin is negative, indicating losses. The EBIT and EBITDA margins have also deteriorated, showing operational challenges.
Balance Sheet
65
Positive
The balance sheet reflects a stable financial position with a low debt-to-equity ratio of 0.08, indicating low leverage. However, the return on equity is negative, reflecting the company's struggle to generate profits from its equity base. The equity ratio is healthy, suggesting a strong capital structure.
Cash Flow
50
Neutral
The cash flow statement reveals a decline in free cash flow growth by 17.3% in the TTM period. The operating cash flow to net income ratio is positive, indicating that the company generates sufficient cash from operations relative to its net income. However, the free cash flow to net income ratio suggests that cash generation is not fully covering net losses.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue346.27M332.07M219.79M137.04M94.08M62.65M
Gross Profit277.96M271.86M174.81M105.03M78.26M52.96M
EBITDA25.03M38.14M-45.02M-58.34M-36.60M-7.09M
Net Income-9.47M18.25M-57.47M-67.14M-31.29M-10.28M
Balance Sheet
Total Assets544.73M531.24M453.34M447.33M462.57M439.33M
Cash, Cash Equivalents and Short-Term Investments275.93M293.13M243.10M258.63M329.63M409.85M
Total Debt37.35M26.34M15.34M13.31M8.08M0.00
Total Liabilities89.35M75.40M62.07M48.18M50.83M23.64M
Stockholders Equity455.38M455.83M391.27M399.15M411.74M415.69M
Cash Flow
Free Cash Flow34.54M36.54M-19.25M-47.29M-22.47M5.11M
Operating Cash Flow62.49M64.87M-5.63M-41.66M-18.98M9.87M
Investing Cash Flow-59.83M-50.14M-16.18M-166.54M-66.66M-4.75M
Financing Cash Flow-6.00M6.14M-2.30M1.51M5.42M305.89M

Castle Biosciences Technical Analysis

Technical Analysis Sentiment
Positive
Last Price23.56
Price Trends
50DMA
19.42
Positive
100DMA
18.84
Positive
200DMA
22.21
Positive
Market Momentum
MACD
1.38
Negative
RSI
68.31
Neutral
STOCH
73.02
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSTL, the sentiment is Positive. The current price of 23.56 is above the 20-day moving average (MA) of 21.20, above the 50-day MA of 19.42, and above the 200-day MA of 22.21, indicating a bullish trend. The MACD of 1.38 indicates Negative momentum. The RSI at 68.31 is Neutral, neither overbought nor oversold. The STOCH value of 73.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CSTL.

Castle Biosciences Risk Analysis

Castle Biosciences disclosed 76 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 (51)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
63
Neutral
$672.79M-4.54%4.31%69.57%
59
Neutral
$669.80M30.59-2.15%20.40%-165.41%
59
Neutral
$1.21B-17.68%22.37%86.08%
52
Neutral
$631.77M-70.03%3.83%-137.31%
52
Neutral
$451.37M-60.26%0.36%22.13%
51
Neutral
$7.92B-0.43-41.67%2.21%22.29%-1.85%
48
Neutral
$492.77M-22.40%13.17%64.50%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CSTL
Castle Biosciences
23.56
-5.77
-19.67%
LAB
Standard BioTools
1.30
-0.69
-34.67%
MYGN
Myriad Genetics
6.61
-20.53
-75.64%
FLGT
Fulgent Genetics
21.95
0.76
3.59%
PSNL
Personalis
5.24
-0.08
-1.50%
GRAL
GRAIL Inc
36.91
23.57
176.69%

Castle Biosciences Corporate Events

Shareholder MeetingsBusiness Operations and Strategy
Castle Biosciences Updates Bylaws for Improved Governance
Neutral
Aug 8, 2025

On August 5, 2025, Castle Biosciences, Inc. adopted amended and restated bylaws, introducing several changes to enhance governance and operational clarity. These changes include revisions to stockholder meeting procedures, nomination processes, and director and officer indemnification, potentially impacting the company’s governance structure and stakeholder interactions.

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Castle Biosciences Reports Strong Q2 2025 Financial Results
Positive
Aug 4, 2025

On August 4, 2025, Castle Biosciences reported its second-quarter financial results, highlighting a revenue of $86 million and a 33% increase in total test reports for its core products compared to the previous year. Despite challenges such as the Novitas LCD affecting certain test coverages and the discontinuation of IDgenetix, the company raised its full-year revenue guidance to $310-320 million. The company also announced strategic moves including a tuck-in acquisition and a collaboration with SciBase, aiming to support long-term value creation. Additionally, the DecisionDx-Melanoma test received Breakthrough Device designation from the FDA, with studies showing a 32% reduction in mortality risk for patients using the test.

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: Aug 28, 2025