TEM Stock Forecast & Price Target

Tempus AI Inc. has demonstrated significant operational growth, evidenced by a total revenue increase of 35.9% year-over-year, driven primarily by a 30.6% rise in Genomics revenue and a notable 44.6% surge in Data & Other segments. The company also reported an increase in NGS tests delivered, rising to 72.5k in 3Q24, up from both the previous quarter and the same period last year. Furthermore, with guidance indicating a core growth rate of approximately 30% and improvements in EBITDA burn, Tempus AI shows strong potential for continued financial advancement.

Tempus AI's stock outlook appears negative due to the inherent risks associated with potential declines in reimbursement rates, which could adversely affect its growth trajectory. Additionally, the company's dependence on its genomic testing market share and health system clients raises concerns about its ability to effectively monetize its extensive dataset in a competitive landscape. With flat year-over-year operating cash flow and a significant amount of debt, the financial position appears precarious, especially as the company trades at a discount relative to its peers with an EV/revenue multiple of 8.3x its FY25 estimate.