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Castle Biosciences Sinks 6% On Wider-Than-Expected 4Q Loss, Sales Top Estimates

Castle Biosciences posted a worse-than-feared loss in the fourth quarter but beat analysts’ expectations for revenues. Shares of the skin cancer diagnostics company dropped 6.1% in Monday’s extended trading session after closing 4.2% lower on the day.

Castle Biosciences (CSTL) reported a 4Q loss of $0.23 per share, compared to earnings of $0.11 recorded in the prior-year quarter. Analysts had expected the company to report a loss of $0.12 per share.

Additionally, net revenues of $17.3 million outpaced the consensus estimate of $15.74 million but decreased 1.9% from the year-ago period. The company’s gross margin in the quarter was 85%, down from 89% in the prior-year period. (See Castle Biosciences stock analysis on TipRanks)

Castle Biosciences CEO Derek Maetzold said, “Earlier today, we announced clinical availability of an artificial intelligence-based integrated DecisionDx-Melanoma test result – integrating meaningful clinical and pathologic features with tumor biology identified by our DecisionDx-Melanoma test – designed to provide a more precise prediction of risk.”

“Further, we are developing several pipeline tests that are focused on answering clinical questions with high unmet need along the patient care continuum… We estimate these pipeline tests could add an additional $3.6 billion to our U.S. total addressable market (TAM), bringing our aggregate U.S. TAM to slightly more than $5.5 billion,” Maetzold added.

Following the 4Q results, Canaccord Genuity analyst Max Masucci maintained a Buy rating and a price target of $94 (42.3% upside potential) on the stock.

The analyst said, “In the realm of skin cancer diagnostics, CSTL is the epitome of precision medicine, and we’d use any broad-based weakness to gain exposure to its long-term value creation opportunity.”

Castle Biosciences shares have exploded almost 125% over the past year, while the stock still scores a Strong Buy consensus rating based on 4 unanimous Buys. That’s alongside an average analyst price target of $86, which implies 30.2% upside potential to current levels.

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