Palantir shares rise 5% premarket as AI-fueled demand powers annual guidance raise
On Monday, TD Cowen analysts reiterated their Buy rating and maintained a $62.00 price target on Tempus AI Inc (NASDAQ:TEM) stock, which currently trades at $59.21. According to InvestingPro data, the stock experienced a significant decline of 16% last week, despite being up over 63% year-to-date. The recent decline, primarily attributed to a short report, comes as InvestingPro’s Fair Value analysis suggests the stock is currently overvalued.
The short report highlighted issues related to customer revenue arrangements, management, corporate insider and board members’ past shareholder stewardship, data backlog trends, transparency, minimal AI revenues, and certain accounting practices. The analysts found some of these concerns to be misleading or incorrect, noting that several issues were already known and disclosed. While they acknowledged that some new points warrant further investigation, InvestingPro data shows the company maintains strong revenue growth of 43% and a healthy gross profit margin of 57%, though operating with moderate debt levels.
The stock fell 20% on Wednesday but recovered 4% by the end of the week. Despite the decline, TD Cowen analysts believe the reaction was overblown, considering the stock had risen nearly 100% year-to-date prior to the report. The analysts emphasized that the stock’s valuation did not allow much room for negative news, contributing to the sharp downturn.
The analysts also mentioned discussions with Tempus AI’s CFO to address key investor concerns and shared their insights on the situation. They remain confident in their Buy rating despite the recent turbulence.
Tempus AI’s stock performance and the analysts’ response highlight the volatility and sensitivity of the market to reports and investor sentiment.
In other recent news, Tempus AI has unveiled a new liquid biopsy assay, xM for TRM, aimed at monitoring treatment response in cancer patients. The assay was introduced at the American Society of Clinical Oncology Annual Meeting and is expected to be available for clinical use later this year. Tempus AI also announced a strategic collaboration with Boehringer Ingelheim to enhance cancer treatment research, utilizing Tempus’s AI-powered platform to accelerate drug discovery processes. Additionally, Tempus AI has partnered with Verastem (NASDAQ:VSTM) Oncology to develop a companion diagnostic test for recurrent low-grade serous ovarian cancer, which is currently being utilized in a global Phase 3 clinical trial. Tempus AI shareholders recently approved all proposals at the annual meeting, including the election of nine directors and the appointment of PricewaterhouseCoopers LLP as the independent auditor for 2025. A proposal to reincorporate from Delaware to Nevada was also approved, although the board retains discretion over its execution. Morgan Stanley (NYSE:MS) has raised its price target for Tempus AI to $65, citing the company’s strong first-quarter performance and a significant development contract with AstraZeneca (NASDAQ:AZN) and the Pathos foundation. This contract is expected to contribute significantly to the company’s growth in the coming years.
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