Castle Biosciences, Inc. (NASDAQ:CSTL): Are Analysts Optimistic?
With the business potentially at an important milestone, we thought we'd take a closer look at Castle Biosciences, Inc.'s (NASDAQ:CSTL) future prospects. Castle Biosciences, Inc., a commercial-stage diagnostics company, focuses to provide diagnostic and prognostic testing services for dermatological cancers. The US$670m market-cap company announced a latest loss of US$57m on 31 December 2023 for its most recent financial year result. As path to profitability is the topic on Castle Biosciences' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Castle Biosciences
Castle Biosciences is bordering on breakeven, according to the 6 American Healthcare analysts. They expect the company to post a final loss in 2025, before turning a profit of US$1.0m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 62% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Castle Biosciences' growth isn’t the focus of this broad overview, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that Castle Biosciences has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Castle Biosciences, so if you are interested in understanding the company at a deeper level, take a look at Castle Biosciences' company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:
Valuation: What is Castle Biosciences worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Castle Biosciences is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Castle Biosciences’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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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.
