Shares of Castle Biosciences (NASDAQ:), have dropped 3% over the past three months.

However, it is up 16.5% for the past six month, which is slightly more than the rest of the market.

Effective growth strategies have resulted in shares trading higher. This is why I believe this stock should continue to trade higher. (See CSTL stock charts on TipRanks)

Based in Friendswood, Texas, Castle Biosciences is a commercial-stage provider of dermatologic diagnostic and prognostic solutions that help physicians recognize skin cancer, and make precise predictions about the progression and outcome of the disease.

Its current tests target skin cancers such as squamous and cutaneous melanoma. The tests can also be used to diagnose suspicious pigmented areas and uveal malignant melanoma.

Q2 Earnings

Thanks to a record quarterly volume of all gene expression profile tests sold, total revenue grew more than 79% year-over-year to approximately $22.8 million in the second quarter of 2021, beating analysts’ projections by nearly $4 million.

The company needed to balance the increase in total turnover with higher operating costs to maintain its growth and increase its commercial staff and fund more research and development.

Additionally, Castle Biosciences purchased a skin test to identify melanocytic and other rare forms of cancer. Castle Biosciences suffered a loss of $0.35 per share. This was more than the $0.08 per share loss for the same period of 2020. It beat the consensus average of $0.02.

Recent Achievements, Near-Term Perspectives

Two recent events have enhanced the value of the company’s portfolio.

First, approval from the New York State Department of Health of the Castle’s test that detects melanocytic tumors.

A second, five-year U.S. federal contract was awarded to provide the Veterans Health Administration with tests that can be used for diagnosing cutaneous melanomas metastasis and sending out lymph nodes positives.

Castle anticipates continued growth in test volumes and market penetration as a result its various growth initiatives.

The company projects full-year revenue of $89 million to $93 million, which represents a 42% to 48.5% increase over full 2020 sales. Analyst projections range from $91 million and $93 millions.

Wall Street’s Take

In the past three months, three Wall Street analysts have issued a 12-month price target for Castle Biosciences. Castle Biosciences average target price is $84.33, which implies 18.9% upside. Based on three Buys, the analyst consensus rating is Strong Buy.

Summary

If total revenue keeps on growing, the market value of this stock should follow, making new highs.

The share price will benefit further if the net profit is converted to bottom line. It is expected to outperform other markets.

Disclosure: Alberto Abaterusso had no position at the time this article was published.

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