Castle Biosciences (CSTL) AI Stock Analysis

• Market Cap: $520.86M
• Dividend Yield: N/A
• Average Volume (3M): 475.55K
• Price to Earnings (P/E): 30.6
• Beta (1Y): 0.60
• Revenue Growth: 38.43%
• EPS Growth: 86.19%
• Country: US
• Employees: 784
• Sector: Healthcare
• Sector Strength: 44
• Industry: Medical - Diagnostics & Research
• EPS (TTM): -0.90
• Shares Outstanding: 28,872,314
• 10 Day Avg. Volume: 437,383
• 30 Day Avg. Volume: 475,554
• PEG Ratio: -0.08
• Price to Book (P/B): 1.54
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -12.97
• Enterprise Value/Market Cap: 0.97
• Enterprise Value/Revenue: 0.39
• Enterprise Value/Gross Profit: 1.69
• Enterprise Value/Ebitda: 4.59
• 1Y Price Target: $35.00
• Price Target Upside: 89.80% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

• Rating: 65 Neutral
• Price Target: $18.00 ▼(-2.39%Downside)

Castle Biosciences shows strong financial performance with substantial revenue growth, improved profitability, and positive cash flow metrics. However, technical analysis indicators reflect a bearish trend, and the valuation suggests potential overvaluation due to the negative P/E ratio. The recent earnings call provided mixed insights, with notable growth but also operational challenges. Overall, these factors result in a moderate stock score, highlighting strengths in financial health but caution in technical and valuation aspects.

Positive Factors

Financial Performance

Castle raised its 2025 revenue guidance given the solid quarter.

Market Position

Castle Biosciences is seen as a leading skin cancer diagnostics company with a growing position in gastrointestinal cancer diagnostics.

Product Expansion

The acquisition of Previse and its Esopredict test is seen as beneficial for strengthening Castle Biosciences' position in the gastrointestinal diagnostics market.

Negative Factors

Growth Strategy Risk

There is material risk to the company executing on its growth strategy.

Product Revenue Decline

CSTL will no longer benefit from DDx-SCC revenue.

Revenue Impact

Castle expects the loss of Medicare coverage for DecisionDx-SCC to have a material impact on gross margin in 2025.

Castle Biosciences Business Overview & Revenue Model

Company Description

Castle 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 Money

Castle 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 Financial Statement Overview

Summary

Castle Biosciences demonstrates substantial financial improvement across all fronts, with strong revenue growth, improved profitability, and cash flow recovery. The company's low debt levels and strong equity base provide stability, while the positive cash flow metrics underscore efficient operational management. These factors position the company well for future growth and resilience.

Income Statement

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

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

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.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
347.08M	332.07M	219.79M	137.04M	94.08M	62.65M
	Gross Profit
298.06M	271.86M	174.81M	105.03M	78.26M	52.96M
	EBIT
-13.79M	8.67M	-67.98M	-91.14M	-40.08M	-6.54M
	EBITDA
37.27M	38.14M	-45.02M	-58.34M	-36.60M	-7.09M
	Net Income Common Stockholders
-5.07M	18.25M	-57.47M	-67.14M	-31.29M	-10.28M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
275.15M	293.13M	243.10M	258.63M	329.63M	409.85M
	Total Assets
501.71M	531.24M	453.34M	447.33M	462.57M	439.33M
	Total Debt
25.84M	26.34M	15.34M	13.31M	8.08M	0.00
	Net Debt
-63.84M	-93.36M	-83.51M	-109.64M	-321.55M	-409.85M
	Total Liabilities
61.41M	75.40M	62.07M	48.18M	50.83M	23.64M
	Stockholders Equity
440.31M	455.83M	391.27M	399.15M	411.74M	415.69M
Cash Flow		Free Cash Flow
41.75M	36.54M	-19.25M	-47.29M	-22.47M	5.11M
	Operating Cash Flow
65.67M	64.87M	-5.63M	-41.66M	-18.98M	9.87M
	Investing Cash Flow
-52.87M	-50.14M	-16.18M	-166.54M	-66.66M	-4.75M
	Financing Cash Flow
-6.06M	6.14M	-2.30M	1.51M	5.42M	305.89M

Castle Biosciences Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 18.44
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 18.44 is above the 20-day moving average (MA) of 16.68, above the 50-day MA of 18.34, and below the 200-day MA of 25.61, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 60.87 is Neutral, neither overbought nor oversold. The STOCH value of 89.53 is Negative, 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
GRAL	68 Neutral	$1.52B	―	-62.22%	―	30.47%	-26.63%
CSTL	65 Neutral	$520.86M	30.59	-1.20%	―	38.43%	86.19%
PSNL	61 Neutral	$488.44M	―	-51.25%	―	15.57%	31.82%
FLGT	59 Neutral	$663.21M	―	-3.61%	―	1.71%	76.00%
Sector *	54 Neutral	$5.38B	3.40	-45.06%	3.28%	16.75%	-0.02%
MYGN	51 Neutral	$482.09M	―	-13.84%	―	12.15%	61.33%
LAB	49 Neutral	$410.21M	―	-25.73%	―	33.86%	64.34%

Castle Biosciences Corporate Events

Castle Biosciences Holds Annual Stockholders Meeting

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.

Castle Biosciences Reports 21% Revenue Increase in Q1 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.