Castle Biosciences (CSTL) PT Lowered to $32 at BTIG

BTIG analyst Sung Ji Nam lowered the price target on Castle Biosciences (NASDAQ: CSTL) to $32.00 (from $40.00) while maintaining a Buy rating.

The analyst comments "Shares of CSTL are indicating down 9% despite turning in a Q1 beat and raise. CSTL delivered +21% Y/Y revenue growth in Q1 on +17% Y/Y volume growth and 81% Adj. GMs. The surprise on the print was CSTL's announced acquisition of Previse (private), a small, commercial-stage GI diagnostics testing company that is launched with a test similar to its TissueCypher test. CSTL indicated that the test does not increase its TAM, and its reimbursement rate is lower than TissueCypher, thus our thinking is that CSTL may have acquired it to reduce competition risks. Upon closing of the deal (expected over the coming weeks), CSTL will also obtain a non-endoscopic sponge technology for a pipeline screening test for esophageal cancer which looks similar to EsoGuard, a test commercialized by Lucid Diagnostics (LUCD, Buy, $2.00), though data and timelines of any test launch there are not clear. The timing of the deal coincides with (1) CSTL announcing it shut down its IDGenetix test; and (2) the recent roll-off of CMS coverage for its SCC test. We still think CSTL can win back its SCC test reimbursement (likely through its reconsideration requests), and thus we reiterate our Buy rating on CSTL. Shares of CSTL trade at just 1.0x our 2026 rev estimate of $304M, below its SMID clinical peers that trade at 4x. We lower our PT to $32 from $40."

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