Tempus AI today
(As of 12/19/2024 5:45 PM ET)
- 52 week range
- $22.89
▼
$79.49
- Target price
- $56.00
In mid-August, approximately two months after Tempus A.I. NASDAQ: TOPIC In its initial public offering (IPO), shares rose an astonishing 93%. However, the stock has experienced wild volatility and is now 8% below its opening price of $37 as of the December 18 close.
Overall, Wall Street analysts seem to think the stock has fallen too far. The average price target suggests the stock could rise 74% from its December 18 closing price. Guggenheim’s recently issued $74 price target is particularly bullish. This indicates more than double the growth potential. So, is the sharp fall in Tempus share prices an opportunity to enter a recession? I’ll provide a brief overview of Tempus AI’s business and the progress it has made since it went public, and give my overall opinion on the title.
Tempus: genetic testing for cancer and data obtained using artificial intelligence
Tempus AI is a medical company that helps fight cancer. To do this, he conducts genetic tests and looks for mutations and other anomalies in the genetic code. Cancer occurs when human cells deviate from their normal processes. This deviation is often caused by changes in a person’s DNA, since these are the instructions that govern cells. By detecting genetic abnormalities, the company can detect early signs of cancer.
Through genetic testing, the company has created a huge database of genetic data. The company also integrates patient data from free sources and healthcare providers. The company uses AI to analyze all this data. His goal is to improve the quality of his test results and create personalized recommendations for each patient. It also sells its data to drug developers, helping them improve preclinical discovery and clinical trial design.
Financial results and Ambry acquisition show strength
The company splits its revenue between genetic testing and the data and services it sells. Tempus initially generated revenue from testing. Tempus can then sell this data to drug developers. Over time, the income from the sale of test data becomes several times greater than the initial income from testing.
Last quarter, genomic testing revenue accounted for 64% of total revenue. However, the data and services revenue growth rate of 64% was more than three times higher than the genomics revenue growth rate of 20%. The growth rate of data and services has accelerated significantly, while the growth rate of genomics has slowed slightly. Last quarter, total revenues grew at a fast and accelerating rate of 33%.
Tempus AI stock forecast today
$56.00
Growth potential 69.54%Moderate purchase
Based on ratings from 12 analysts
| High forecast | $74.00 |
|---|---|
| Average forecast | $56.00 |
| Low forecast | $44.00 |
Tempus AI Stock Forecast Details
Tempus’ preliminary forecast indicates revenue growth of 24% in 2025. The company also expects its adjusted earnings before taxes, depreciation and amortization (EBITDA) to be positive. This will largely be driven by the consistently positive EBITDA of Ambry Genetics, which is being acquired by Tempus. The slower growth rate is also largely due to Ambry’s relatively slower growth rate compared to Tempus’ core business. The deal is scheduled to close in the first quarter of 2025.
With this acquisition, Tempus intends to expand its capabilities in hereditary genetic cancer testing. Embry also conducts tests in other areas such as rare diseases, cardiology and reproductive health. This deal will bring several positive results to Tempus. This increases the number and types of tests Tempus can carry out. This will allow more data to be transferred to the Tempus platform as Ambry tests approximately 400,000 patients per year. Over time, Tempus will be able to sell this data, generating revenues several times greater than the revenues generated from the tests. The company may also be able to find new drug developers to sell its data on diseases other than cancer.
Additionally, 95% of Amrby’s testing volume comes from the in-network provider. Tempus tests are primarily conducted offline. This means that patients incur high out-of-pocket costs. Tempus could use Amrby’s connections to expand its reach within the network. This will make Tempus tests cheaper for patients to access, expanding the market. It may already be working. On December 18, the company announced that it had signed in-network agreements with several healthcare organizations.
Tempus AI shares look poised for recovery
Overall, the Tempus program appears to be getting stronger, but its value remains the same. The company’s vast amount of data and ability to accumulate more gives it a strong competitive advantage in this space. In my opinion, the stock is poised for a significant recovery. However, the shares of these recently post-IPO companies will likely continue to be highly volatile, which is a key factor.
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