Analyst Puneet Souda of Leerink Partners maintained a Buy rating on Castle Biosciences (CSTL – Research Report), with a price target of $35.00.
Puneet Souda’s Buy rating for Castle Biosciences is primarily driven by the company’s impressive performance in skin cancer diagnostics, underpinned by its genomic expertise and a robust total addressable market which is estimated at $8 billion. The company’s third-quarter results exceeded forecasts, with revenues reaching $61 million, a significant growth of 66% year-on-year, and surpassing Souda’s estimates of $45 million. Additionally, Castle Biosciences raised its revenue guidance to over $200 million, previously it was over $180 million. The strong performance can be attributed to a favorable Squamous Cell Carcinoma (SCC) reimbursement, which was not initially factored into the company’s second-half guidance due to coverage uncertainties.
The company’s core test, DDx-M, continues to be a consistent growth driver, and the recent submission to the National Comprehensive Cancer Network (NCCN) is only expected to bolster potential guideline inclusion. Furthermore, after pausing TissueCypher orders in the previous quarter due to operational constraints, the tests were resumed, delivering a notable 310% year-on-year volume growth. The company’s DDx-SCC also showed promising growth, with a 72% increase in tests over the year, which was a key contributor to the strong quarterly performance. Looking ahead, Puneet Souda remains optimistic about Castle Biosciences’ potential, maintaining a price target of $35, as he anticipates coverage stabilization by the second half of 2024.
Souda covers the Healthcare sector, focusing on stocks such as Quanterix, Danaher, and Illumina. According to TipRanks, Souda has an average return of -11.8% and a 32.83% success rate on recommended stocks.
In another report released on November 3, BTIG also reiterated a Buy rating on the stock with a $32.00 price target.
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Castle Biosciences (CSTL) Company Description:
Castle Biosciences, Inc. is a commercial-stage dermatological cancer company, which engages in the provision of genomic information for physicians and patients. The company offers DecisionDx-Melanoma, a proprietary multi-gene expression profile (GEP) test that predicts the risk of metastasis and recurrence for patients diagnosed with invasive cutaneous melanoma. It also markets DecisionDx-UM, which is a proprietary GEP test that predicts the risk of metastasis for patients with uveal melanoma. The company was founded by Derek J. Maetzold in September 2007 and is headquartered in Friendswood, TX.
Read More on CSTL:
- Castle Biosciences announces new data on pipeline test ability
- Castle Biosciences raises FY23 revenue view to at least $200M, consensus $187.1M
- Castle Biosciences reports Q3 EPS (26c), consensus (76c)
- Castle Biosciences to share portfolio of GEP tests at FC23
- Castle Biosciences management to meet virtually with Stephens
