Castle Biosciences (CSTL) AI Stock Analysis

• Market Cap: $1.15B
• Dividend Yield: N/A
• Average Volume (3M): 317.88K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.50
• Revenue Growth: 10.15%
• EPS Growth: -295.52%
• Country: US
• Employees: 784
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Diagnostics & Research
• EPS (TTM): -0.02
• Shares Outstanding: 29,188,660
• 10 Day Avg. Volume: 348,648
• 30 Day Avg. Volume: 317,881
• PEG Ratio: -0.31
• Price to Book (P/B): 1.62
• Price to Sales (P/S): 2.23
• P/FCF Ratio: 20.26
• Enterprise Value/Market Cap: 0.94
• Enterprise Value/Revenue: 3.17
• Enterprise Value/Gross Profit: 3.96
• Enterprise Value/Ebitda: 42.19
• 1Y Price Target: $49.80
• Price Target Upside: 27.89% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 62 Neutral
• Price Target: $42.00 ▲(7.86% Upside)

The score is anchored by mixed financial performance (profitability and free-cash-flow growth concerns) but supported by constructive technicals and clear operating momentum from raised guidance, strong test volume growth, and new product launch traction. Valuation remains a key drawback due to losses (negative P/E) and no dividend support, while reimbursement uncertainty is an important ongoing risk.

Positive Factors

Test Volume & Revenue Growth

Sustained, high single-digit to double-digit top-line growth driven by rising core test volumes indicates durable demand and clinical adoption. Scalable lab operations and volume leverage support longer-term revenue expansion and justify continued reinvestment in commercialization.

New Product Launch & Clinical Adoption

Introducing AdvanceAD-Tx into a large atopic dermatitis market (~$33B) with strong clinician intent signals provides durable diversification beyond oncology. Early clinical acceptance accelerates adoption curves and can create a new, sustainable revenue stream if reimbursement and outcomes follow.

Strong Liquidity Position

A near-$300M liquidity cushion and conservative leverage give Castle flexibility to fund R&D, commercial expansion, and reimbursement efforts without urgent dilution. This balance sheet strength supports multi-quarter execution on strategy and buffers timing risks in reimbursement.

Negative Factors

Weak Profitability

Recurring negative net income despite revenue growth signals structural margin pressure from rising OPEX and some cost inflation. Persistent losses constrain retained earnings, slow deleveraging of operating inefficiencies, and can limit long-term capital available for strategic initiatives.

Declining Free Cash Flow Growth

A drop in free cash flow growth reduces internal funding for commercialization and R&D over time, increasing reliance on external financing or equity. Lower FCF momentum undermines flexibility for capital allocation and heightens execution risk across multiple quarters.

Reimbursement & Portfolio Concentration Risk

Uncertain Medicare coverage timelines for SCC create durable revenue risk given reliance on payer reimbursement; discontinuing IDgenetix narrows commercial diversification. Together these structural factors could impede sustained uptake and magnify sensitivity to payer and clinical adoption outcomes.

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 diagnostic tests, which are utilized by healthcare providers to assess cancer risk and guide treatment decisions. The company operates a laboratory that processes these tests, and it bills healthcare insurers and patients for these services. Key revenue streams include reimbursement from insurance companies, direct payments from patients, and partnerships with healthcare providers and institutions that utilize its testing services. Additionally, Castle Biosciences may benefit from collaborations or licensing agreements that enhance its market reach and product offerings.

Castle Biosciences Financial Statement Overview

Summary

Mixed fundamentals: strong gross margin and a stable, low-leverage balance sheet, but profitability remains weak (negative net/EBIT margins) and free cash flow growth has declined. Revenue volatility and recent contraction increase execution risk.

Income Statement

Castle Biosciences has shown a volatile revenue growth trajectory, with a significant decline in the TTM period. The gross profit margin remains strong, indicating efficient cost management, but the company struggles with profitability as reflected in negative net profit and EBIT margins. The recent revenue contraction poses a challenge to future growth.

Balance Sheet

The balance sheet is relatively stable with a low debt-to-equity ratio, indicating conservative leverage. However, the negative return on equity suggests inefficiencies in generating returns from equity investments. The equity ratio is healthy, suggesting a strong capital structure.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth, but the company maintains a positive operating cash flow to net income ratio. The free cash flow to net income ratio is moderate, indicating some ability to convert earnings into cash. However, the negative growth in free cash flow is a concern.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	343.53M	332.07M	219.79M	137.04M	94.08M	62.65M
Gross Profit	274.63M	271.86M	174.81M	105.03M	78.26M	52.96M
EBITDA	25.79M	38.14M	-45.02M	-58.34M	-36.60M	-7.09M
Net Income	-12.24M	18.25M	-57.47M	-67.14M	-31.29M	-10.28M
Balance Sheet
Total Assets	562.79M	531.24M	453.34M	447.33M	462.57M	439.33M
Cash, Cash Equivalents and Short-Term Investments	287.54M	293.13M	243.10M	258.63M	329.63M	409.85M
Total Debt	37.14M	26.34M	15.34M	13.40M	8.20M	0.00
Total Liabilities	95.74M	75.40M	62.07M	48.18M	50.83M	23.64M
Stockholders Equity	467.05M	455.83M	391.27M	399.15M	411.74M	415.69M
Cash Flow
Free Cash Flow	25.38M	36.54M	-19.25M	-47.29M	-22.47M	5.11M
Operating Cash Flow	61.78M	64.87M	-5.63M	-41.66M	-18.98M	9.87M
Investing Cash Flow	-63.43M	-50.14M	-16.18M	-166.54M	-66.66M	-4.75M
Financing Cash Flow	-7.76M	6.14M	-2.30M	1.51M	5.42M	305.89M

Castle Biosciences Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 38.94
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 38.94 is below the 20-day moving average (MA) of 40.47, below the 50-day MA of 39.62, and above the 200-day MA of 25.81, indicating a neutral trend. The MACD of 0.23 indicates Positive momentum. The RSI at 43.95 is Neutral, neither overbought nor oversold. The STOCH value of 17.54 is Positive, 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
CDNA	77 Outperform	$1.05B	17.30	24.11%	―	14.46%	―
CSTL	62 Neutral	$1.15B	-86.51	-2.69%	―	10.15%	-295.52%
NEO	55 Neutral	$1.59B	-14.08	-12.99%	―	10.10%	-44.29%
FLGT	53 Neutral	$807.43M	-18.59	-3.80%	―	13.60%	74.64%
PSNL	53 Neutral	$830.32M	-10.50	-43.69%	―	-21.02%	47.74%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
MYGN	41 Neutral	$509.88M	-1.23	-72.52%	―	0.21%	-233.51%

Castle Biosciences Corporate Events

Castle Biosciences Reports Strong Preliminary 2025 Revenue Growth

On Jan. 11, 2026, Castle Biosciences reported preliminary, unaudited results for the fourth quarter and full year ended Dec. 31, 2025, indicating 2025 total revenue is expected to exceed $340 million, above its prior guidance of $327–335 million, driven by strong growth in its core tests DecisionDx-Melanoma and TissueCypher, whose combined test volumes rose 37% year over year. The company also highlighted a 42% year-over-year increase in fourth-quarter core test reports, robust adoption of its November 2025 limited-access launch of AdvanceAD-Tx for atopic dermatitis, and an expected year-end 2025 liquidity position of roughly $300 million in cash, cash equivalents and marketable securities, while noting headwinds from Medicare coverage changes for DecisionDx-SCC and the discontinuation of its IDgenetix test in May 2025 as it refocuses its portfolio and reinforces its balance sheet ahead of planned growth in 2026.

The most recent analyst rating on (CSTL) stock is a Buy with a $50.00 price target. To see the full list of analyst forecasts on Castle Biosciences stock, see the CSTL Stock Forecast page.

Castle Biosciences Raises Revenue Guidance Amid Strong Q3

Castle Biosciences reported strong financial results for the third quarter of 2025, with revenue reaching $83 million and a significant increase in test report volumes for their core products. Despite challenges such as the Novitas LCD and discontinuation of IDgenetix, the company raised its full-year revenue guidance to $327-335 million. The launch of AdvanceAD-Tx, a new test for atopic dermatitis, highlights their commitment to addressing unmet needs in clinical dermatology.

The most recent analyst rating on (CSTL) stock is a Buy with a $23.56 price target. To see the full list of analyst forecasts on Castle Biosciences stock, see the CSTL Stock Forecast page.