Castle Biosciences Maintains Strong Buy Rating with $32 Price Target

BTIG analyst Mark Massaro maintains a Buy rating on Castle Biosciences with a $32.00 price target, citing the company's strong position in the healthcare sector. The analyst consensus is Strong Buy with a price target consensus of $36.00, representing a 134.99% upside from current levels. Massaro has a success rate of 29.48% and an average return of -9.3%.

Title: Castle Biosciences Reports Surprising Q2 2025 Earnings; Analysts Optimistic

Castle Biosciences (CSTL) reported its earnings for the second quarter of 2025, showcasing a significant turnaround with an earnings per share (EPS) of $0.15, which exceeded the forecasted loss of $0.51. The company's revenue reached $86.2 million, surpassing expectations and leading to a 4.57% increase in stock price during the regular trading session. The company's financial health score, as assessed by InvestingPro, remains strong at 3.26, suggesting robust operational fundamentals despite recent market challenges [1].

Key Takeaways
Castle Biosciences reported an EPS of $0.15, significantly outperforming the forecasted -$0.51. This represents an EPS surprise of -129.41%, a substantial deviation from expectations. The company’s actual revenue of $86.2 million also surpassed the forecast of $71.43 million by 20.66%. The stock price of Castle Biosciences increased by 4.57% during regular trading, closing at $14.65. The aftermarket session saw no further price change, indicating a wait-and-see approach by investors [1].

Company Performance
Castle Biosciences demonstrated robust performance in Q2 2025, despite a slight year-over-year decrease in revenue. The company capitalized on strong growth in its key product lines, such as TissueCypher, which saw a 92% year-over-year increase in test reports. These results position Castle Biosciences favorably against industry trends, highlighting its leadership in dermatologic and gastrointestinal testing [1].

Financial Highlights
- Revenue: $86.2 million (1% decrease YoY)
- Earnings per share: $0.15 (exceeding forecast of -$0.51)
- Adjusted EBITDA: $10.4 million
- Cash, cash equivalents, and marketable securities: $275.9 million

Market Reaction
The stock price of Castle Biosciences increased by 4.57% during regular trading, closing at $14.65. This movement reflects investor optimism following the earnings report. Trading near its 52-week low of $14.59, the stock presents an interesting opportunity according to InvestingPro’s Fair Value analysis, which suggests the stock is currently undervalued. The aftermarket session saw no further price change, indicating a wait-and-see approach by investors [1].

Outlook & Guidance
Castle Biosciences raised its full-year revenue guidance to $310-320 million, up from the previous range of $287-297 million. The company anticipates high single-digit volume growth for DecisionDx Melanoma in 2025 and plans to launch a new atopic dermatitis test by the end of the year [1].

Executive Commentary
Derek Massold, CEO of Castle Biosciences, stated, "We delivered another strong quarter and furthered our position as a leader in both our dermatologic and gastrointestinal testing franchises." Frank Stokes, CFO, noted, "We continue to generate impressive data. More than half the physicians are using our melanoma test" [1].

Risks and Challenges
The company faces potential challenges in securing reimbursement for its new tests. Ongoing regulatory processes, such as the DecisionDx SCC LCD reconsideration, could impact future revenue. Continued investment in R&D may pressure short-term profitability [1].

Analysts' Views
BTIG analyst Mark Massaro maintains a Buy rating on Castle Biosciences with a $32.00 price target, citing the company's strong position in the healthcare sector. The analyst consensus is Strong Buy with a price target consensus of $36.00, representing a 134.99% upside from current levels. Massaro has a success rate of 29.48% and an average return of -9.3% [1].

Conclusion
Castle Biosciences’ Q2 2025 earnings report reflects strong operational performance and strategic growth initiatives, positioning the company well for future success. Despite challenges, the company's leadership in dermatologic and gastrointestinal testing, coupled with positive analyst sentiment, suggests a promising outlook.

References
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-castle-biosciences-q2-2025-beats-eps-forecast-93CH-4169015