CSTL: Broader Dermatology Test Adoption Will Support Balanced Long-Term Outlook

Analysts have raised their price target on Castle Biosciences to approximately 38.75 dollars from about 35.63 dollars, citing stronger expectations for revenue growth and slightly improved profit margins, despite a modestly higher discount rate and lower projected future P E multiple.

What's in the News

• An independent expert consensus panel endorsed Castle Biosciences DecisionDx-Melanoma test as providing robust, clinically validated prognostic information that improves melanoma risk stratification and supports more precise treatment decisions (expert consensus paper).
• New clinical data showed DecisionDx-Melanoma enhances sentinel lymph node biopsy decision making and recurrence risk prediction in cutaneous melanoma, with results to be highlighted in oral presentations at the 2nd European Congress on Dermato-Oncology in Paris in November 2025 (conference presentations).
• Castle Biosciences raised its 2025 revenue guidance to 327 million to 335 million dollars, compared with prior expectations of 310 million to 320 million dollars, reflecting stronger anticipated demand across its test portfolio (company guidance).
• The company launched AdvanceAD-Tx, a 487 gene expression profile test designed to personalize systemic therapy selection for patients 12 and older with moderate to severe atopic dermatitis. A limited commercial rollout is beginning in November 2025, with broader availability planned for 2026 (product launch).
• Data on the TissueCypher Barrett's Esophagus test showed it can identify patients at higher risk of progression to esophageal cancer earlier than standard pathology. The findings suggest potential for more risk-aligned surveillance and interventions and earned a Presidential Poster Award at the 2025 American College of Gastroenterology meeting (ACG conference data).

Valuation Changes

• Fair Value Estimate has risen moderately, from 35.63 dollars to 38.75 dollars, reflecting higher expected earnings power.
• Discount Rate has increased slightly, from 6.78 percent to 6.96 percent, indicating a modestly higher perceived risk or cost of capital.
• Revenue Growth has been revised up significantly, from roughly 1.07 percent to about 6.01 percent, driven by stronger demand expectations.
• Net Profit Margin has improved marginally, from approximately 5.39 percent to about 5.45 percent, suggesting slightly better operating leverage.
• Future P E has been reduced meaningfully, from about 72.02 times to roughly 65.89 times, implying a more conservative multiple on projected earnings.