Castle Biosciences (CSTL) AI Stock Analysis

• Market Cap: $657.62M
• Dividend Yield: N/A
• Average Volume (3M): 516.81K
• Price to Earnings (P/E): 30.6
• Beta (1Y): 1.05
• Revenue Growth: 20.40%
• EPS Growth: -165.41%
• Country: US
• Employees: 784
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Diagnostics & Research
• EPS (TTM): 0.15
• Shares Outstanding: 29,008,282
• 10 Day Avg. Volume: 403,079
• 30 Day Avg. Volume: 516,812
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.55
• Enterprise Value/Revenue: 1.05
• Enterprise Value/Gross Profit: 1.31
• Enterprise Value/Ebitda: 14.57
• 1Y Price Target: $35.60
• Price Target Upside: 56.55% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 59 Neutral
• Price Target: $23.50 ▲(3.34% Upside)

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

Revenue Growth

The significant year-over-year growth in test volumes and revenue indicates strong demand for Castle's diagnostic tests, supporting long-term revenue expansion.

Strategic Collaborations

Collaborations and new product developments enhance Castle's competitive edge and market reach, potentially driving future growth and innovation.

Strong Financial Position

A robust cash position provides financial flexibility for continued investment in growth initiatives and strategic opportunities, supporting long-term stability.

Negative Factors

Reimbursement Challenges

Reimbursement issues can hinder revenue growth and market adoption of key products, impacting long-term financial performance and strategic goals.

Decreased Gross Margins

A decline in gross margins suggests rising costs or pricing pressures, which could affect profitability and cash flow sustainability over time.

Revenue Decline in Dermatological Tests

Declining revenues in dermatological tests highlight potential market challenges or competitive pressures, affecting overall revenue growth prospects.

Castle Biosciences Business Overview & Revenue Model

Company Description

Castle Biosciences, Inc. is a biotechnology company focused on improving the treatment of cancer and other diseases through innovative diagnostic tests. The company specializes in developing and commercializing genomic tests that provide physicians with critical information to guide treatment decisions for patients, particularly in the fields of dermatology and oncology. Its core products include tests for melanoma, non-melanoma skin cancer, and other cancers, enabling more personalized and effective care for patients.

How the Company Makes Money

Castle 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 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

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

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

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	346.27M	332.07M	219.79M	137.04M	94.08M	62.65M
Gross Profit	277.96M	271.86M	174.81M	105.03M	78.26M	52.96M
EBITDA	25.03M	38.14M	-45.02M	-58.34M	-36.60M	-7.09M
Net Income	-9.47M	18.25M	-57.47M	-67.14M	-31.29M	-10.28M
Balance Sheet
Total Assets	544.73M	531.24M	453.34M	447.33M	462.57M	439.33M
Cash, Cash Equivalents and Short-Term Investments	275.93M	293.13M	243.10M	258.63M	329.63M	409.85M
Total Debt	37.35M	26.34M	15.34M	13.31M	8.08M	0.00
Total Liabilities	89.35M	75.40M	62.07M	48.18M	50.83M	23.64M
Stockholders Equity	455.38M	455.83M	391.27M	399.15M	411.74M	415.69M
Cash Flow
Free Cash Flow	34.54M	36.54M	-19.25M	-47.29M	-22.47M	5.11M
Operating Cash Flow	62.49M	64.87M	-5.63M	-41.66M	-18.98M	9.87M
Investing Cash Flow	-59.83M	-50.14M	-16.18M	-166.54M	-66.66M	-4.75M
Financing Cash Flow	-6.00M	6.14M	-2.30M	1.51M	5.42M	305.89M

Castle Biosciences Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 22.74
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CSTL, the sentiment is Neutral. The current price of 22.74 is below the 20-day moving average (MA) of 23.17, above the 50-day MA of 20.31, and above the 200-day MA of 21.73, indicating a neutral trend. The MACD of 0.65 indicates Positive momentum. The RSI at 53.04 is Neutral, neither overbought nor oversold. The STOCH value of 50.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CSTL.

Castle Biosciences Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FLGT	63 Neutral	676.46M	-13.21	-4.57%	―	4.31%	69.57%
CSTL	59 Neutral	$657.62M	30.59	-2.15%	―	20.40%	-165.41%
GRAL	59 Neutral	1.68B	-3.73	-80.97%	―	22.37%	86.08%
MYGN	52 Neutral	718.30M	-1.81	-101.83%	―	3.83%	-137.31%
PSNL	52 Neutral	537.38M	-4.70	-47.85%	―	0.36%	22.13%
LAB	48 Neutral	500.41M	-4.03	-28.38%	―	13.17%	64.50%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Castle Biosciences Corporate Events

Castle Biosciences Updates Bylaws for Improved Governance

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.

Castle Biosciences Reports Strong Q2 2025 Financial Results

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.