Castle Biosciences (CSTL) Plunges 11.36% on Mixed Earnings, Acquisition News

Castle Biosciences (CSTL) shares plummeted 11.36% today, marking the second consecutive day of decline, with a total drop of 14.11% over the past two days. The stock price hit its lowest level since November 2023, experiencing an intraday decline of 16.27%.

The strategy of buying CSTL shares after they reach a recent low and holding for one week resulted in a 6.54% return over the past five years, compared to a benchmark return of 39.28%. The strategy had a Sharpe ratio of 0.38, a maximum drawdown of -5.24%, and a volatility of 7.38%. The CAGR was 2.81%.

Castle Biosciences reported a quarterly loss of $0.20 per share for the first quarter of 2025, which was worse than the Zacks Consensus Estimate of a loss of $0.08. However, the company exceeded revenue expectations, reporting first-quarter revenue of $87.99 million, surpassing analysts' expectations of $80.38 million. This mixed financial performance may have influenced stock price fluctuations.

Castle Biosciences announced a definitive agreement to acquire Previse, a gastrointestinal health company. This acquisition aims to expand Castle's GI testing portfolio and enhance their gastroenterology franchise. The strategic move is expected to offer complementary methylation technology and additional pipeline technologies developed at Johns Hopkins University School of Medicine, potentially influencing investor sentiment and stock valuation.

Lake Street and BTIG analysts revised their price targets for Castle Biosciences. Lake Street adjusted the target from $40 to $35, while BTIG cut the target to $32 from $40. Despite these reductions, both firms maintained a positive outlook on the stock, which could contribute to changes in stock price as investors react to analyst opinions.