Castle Biosciences (CSTL) AI Stock Analysis

• Market Cap: $479.86M
• Dividend Yield: N/A
• Average Volume (3M): 439.89K
• Price to Earnings (P/E): 30.6
• Beta (1Y): 0.55
• Revenue Growth: 38.43%
• EPS Growth: 86.19%
• Country: US
• Employees: 784
• Sector: Healthcare
• Sector Strength: 54
• Industry: Medical - Diagnostics & Research
• EPS (TTM): -0.90
• Shares Outstanding: 28,872,314
• 10 Day Avg. Volume: 636,971
• 30 Day Avg. Volume: 439,892
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.67
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 1.19
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $35.75
• Price Target Upside: 107.73% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

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 Success

Triple-digit growth in CSTL's TissueCypher marked a highlight, indicating strong demand and market success.

Negative Factors

Growth Strategy Risks

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

Product Coverage Loss

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

Reimbursement Uncertainty

There is uncertainty regarding the SCC reimbursement status, which could impact CSTL's profitability.

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 makes money primarily through the sale of its genomic testing services. The company develops and commercializes proprietary diagnostic tests that provide critical insights for the treatment of cancers and other diseases. These tests are sold to healthcare providers, who utilize the information to tailor patient care. Revenue is generated from the fees charged for each test performed. Key revenue streams include the DecisionDx-Melanoma test, which assesses the risk of metastasis in patients with melanoma, and other similar tests that aid in the management of skin cancer and other serious conditions. Additionally, Castle Biosciences may engage in partnerships and collaborations with healthcare institutions and research organizations to expand the reach and application of its diagnostic solutions, contributing further to its revenue.

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

Castle Biosciences Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 17.21
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Negative. The current price of 17.21 is below the 20-day moving average (MA) of 19.85, below the 50-day MA of 20.10, and below the 200-day MA of 26.54, indicating a bearish trend. The MACD of -0.84 indicates Positive momentum. The RSI at 33.15 is Neutral, neither overbought nor oversold. The STOCH value of 23.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CSTL.

Castle Biosciences Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CSTL	65 Neutral	$479.86M	30.59	-1.20%	―	38.43%	86.19%
GRAL	60 Neutral	$1.14B	―	-65.92%	―	34.90%	-37.19%
FLGT	59 Neutral	$572.95M	―	-3.61%	―	1.71%	76.00%
PSNL	58 Neutral	$353.23M	―	-51.25%	―	15.57%	31.82%
Sector *	52 Neutral	$5.21B	3.55	-41.91%	2.83%	15.12%	0.42%
MYGN	51 Neutral	$670.09M	―	-13.84%	―	12.15%	61.33%
LAB	40 Underperform	$454.78M	―	-25.73%	―	33.86%	64.34%

Castle Biosciences Corporate Events

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.

Spark’s Take on CSTL Stock

According to Spark, TipRanks’ AI Analyst, CSTL is a Outperform.

Castle Biosciences is well-positioned financially with strong revenue growth and profitability improvements. However, technical analysis presents mixed signals, and the high P/E ratio suggests potential overvaluation. The potential Medicare coverage loss poses a risk, though the company shows resilience and growth potential. These factors collectively give the stock a moderate score.

To see Spark’s full report on CSTL stock, click here.

Castle Biosciences Reports Strong 2024 Financial Performance

Castle Biosciences reported a strong financial performance for the year 2024, with a 51% increase in revenue to $332 million and a 36% rise in test report volume compared to 2023. The company achieved significant growth in its dermatologic and gastroenterology test reports, driven by the clinical value of its tests and strategic commercial execution. The company anticipates generating between $280-295 million in revenue in 2025, focusing on operational excellence and strategic opportunities to enhance stockholder value.