US stock futures dip as Nvidia earnings spark little cheer
On Tuesday, Stifel analysts maintained their Hold rating on Tempus AI Inc (NASDAQ:TEM) shares, while reiterating a $65.00 price target. The stock has experienced a significant 15% decline over the past week, though it maintains an impressive 106% gain year-to-date. The decision follows the company’s fourth-quarter results, which aligned with the preliminary figures released by JPMorgan. Tempus AI reported a 36% revenue increase to $693.4 million, reflecting a solid performance.
The company’s forecast for the fiscal year 2025 suggests that the combined operations of Tempus AI and Ambry Genetics are expected to meet the mid-point of previously outlined projections. This outlook indicates a robust 30% growth in core revenue, which is consistent with the current consensus estimates. According to InvestingPro data, the company maintains a healthy current ratio of 2.29, indicating strong liquidity to support its growth initiatives.
Despite a projected slowdown in Ambry Genetics’ growth to the high teens, down from 25% in the fiscal year 2024, analysts view this conservative estimate as sensible. Questions regarding the anticipated growth in total contract value for data services have emerged, but Stifel analysts consider the existing booked business to be substantial and stable. InvestingPro analysis reveals 8 additional key insights about Tempus AI’s financial health and growth prospects, available exclusively to subscribers.
Stifel’s commentary highlighted that while Tempus AI is on a positive path, the stock’s current valuation appears fair when compared to peers. With a market capitalization of $14.1 billion and a price-to-book ratio of 194.4, it is trading at approximately 8 times sales, in contrast to Natera Inc . (NASDAQ:NTRA) at around 11 times and Guardant Health Inc. (NASDAQ:GH) at about 5.5 times sales. The analysts’ assessment suggests that while Tempus AI demonstrates strong growth prospects, its market valuation is in line with industry standards. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value.
In other recent news, Tempus AI Inc. reported its fourth-quarter earnings for 2024, revealing a revenue of $700 million, which marks a 35.8% increase year-over-year. Despite this strong revenue growth, the company posted an earnings per share (EPS) of -0.18. Tempus AI also completed the acquisition of Ambry Genetics, which is expected to contribute to its projected 2025 revenue of $1.24 billion. The company anticipates an adjusted EBITDA of $5 million for the current year.
JPMorgan recently downgraded Tempus AI’s stock rating from Overweight to Neutral, while raising the price target from $50 to $55. The downgrade follows the company’s earnings report, which showed a slight revenue shortfall in its non-core business. However, Tempus AI raised its 2025 revenue guidance, including contributions from Ambry Genetics. The company’s core business is expected to grow by over 30% year-over-year, supported by advancements in its Genomics sector and Data & Services.
Additionally, Tempus AI launched the Olivia AI personal health app, expanding its product offerings. The company also extended its agreement with Google (NASDAQ:GOOGL) for another five years, which allows for competitive platform rates. These developments reflect Tempus AI’s strategic focus on expanding its connectivity across healthcare institutions and investing in technology and research.
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