Castle Biosciences, Inc. Beat Analyst Profit Forecasts, And Analysts Have New Estimates

Shareholders of Castle Biosciences, Inc. (NASDAQ:CSTL) will be pleased this week, given that the stock price is up 11% to US$26.81 following its latest quarterly results. Revenues of 25% beat expectations by US$87m and was sufficient to generate a statutory profit of US$0.31 - a pleasant surprise given that the analysts were forecasting a loss! Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Castle Biosciences

Taking into account the latest results, the consensus forecast from Castle Biosciences' eight analysts is for revenues of US$296.2m in 2024. This reflects a credible 3.0% improvement in revenue compared to the last 12 months. Per-share losses are expected to explode, reaching US$0.60 per share. Before this earnings announcement, the analysts had been modelling revenues of US$260.4m and losses of US$1.61 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a sizeable increase to their revenue forecasts while also reducing the estimated loss as the business grows towards breakeven.

There was no major change to the consensus price target of US$35.38, perhaps suggesting that the analysts remain concerned about ongoing losses despite the improved earnings and revenue outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Castle Biosciences analyst has a price target of US$45.00 per share, while the most pessimistic values it at US$28.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Castle Biosciences' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.1% growth on an annualised basis. This is compared to a historical growth rate of 37% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.8% annually. So it's pretty clear that, while Castle Biosciences' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at US$35.38, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Castle Biosciences going out to 2026, and you can see them free on our platform here..

Plus, you should also learn about the 3 warning signs we've spotted with Castle Biosciences (including 1 which is a bit concerning) .

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.