Small Caps Begin to Rebound: 5 Stocks to Buy Now

3. Castle Biosciences, Inc. (NASDAQ:CSTL)

Number of Hedge Fund Holders: 12

Market Capitalization as of August 11: $926.747 million

1-month Share Price Gain as of August 11: 41%

Castle Biosciences, Inc. (NASDAQ:CSTL) was founded in 2007 and is headquartered in Friendswood, Texas. The commercial-stage diagnostics company specializes in diagnostic and prognostic testing services for dermatological cancers. Castle Biosciences, Inc. (NASDAQ:CSTL) posted its Q2 results on August 8, reporting a GAAP loss per share of $0.06, beating expectations by $0.70. Its revenue of $34.8 million climbed 52.9% year-over-year and outperformed the Wall Street consensus by $6.43 million. The stock has recovered 41% in the last month. 

On August 9, Baird analyst Catherine Ramsey Schulte raised the price target on Castle Biosciences, Inc. (NASDAQ:CSTL) to $48 from $44 and kept an ‘Outperform’ rating on the shares. The analyst observed that management highlighted ongoing execution by its sales force and territory expansion, as well as indications of rebounding patient volumes. Castle Biosciences, Inc. (NASDAQ:CSTL) also detailed enhanced Medicare collection for DecisionDx-SCC, a primary long-term driver, although intermediate-term ASP dynamics remain partially unclear.

According to Insider Monkey’s data, Castle Biosciences, Inc. (NASDAQ:CSTL) was part of 12 hedge funds’ portfolios at the end of Q1 2022, with collective stakes worth $134.4 million. ARK Investment Management is the biggest shareholder of the company, with 1.17 million shares worth $52.5 million. 

Here is what Wasatch Micro Cap Fund had to say about Castle Biosciences, Inc. (NASDAQ:CSTL) in its Q4 2021 investor letter:

“Castle Biosciences, Inc. (CSTL) was also a significant detractor. The company offers test services for dermatological cancers that include various melanomas, as well as metastatic squamous cell carcinoma. Like a number of other medical conditions, testing and diagnosis of melanomas have been hampered during the pandemic as potential patients avoided office visits with their doctors. Looking forward, we expect rebounding patient volumes and better insurance reimbursements to drive a substantial improvement in Castle’s revenues.”