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Tuesday, Tempus AI Inc (NASDAQ:TEM) shares were in focus after Loop Capital adjusted its price target on the company. Analysts at Loop Capital trimmed the price target to $52.00 from $57.00, while sustaining a Buy rating on the stock. The revised target follows Tempus AI's disclosure of preliminary fourth-quarter 2024 total revenues that fell short of both Loop Capital's and Wall Street's expectations.
The company reported that it anticipates total revenues of approximately $200 million, which reflects an estimated 35% growth. This figure is below the previously projected revenues of $207 million by Loop Capital and $206 million by the consensus. As a result, the full-year 2024 revenue guidance has been adjusted to $693 million, which is beneath the $700 million forecast set earlier in the year by Tempus AI management.
Despite the shortfall in the Compass Contract Research Organization (CRO) business, which the firm considers non-core, Tempus AI expects to see about 30% growth in its genomics business and around 45% growth in its data & services business. The company has not provided detailed profitability guidance but anticipates a sequential improvement in Adjusted EBITDA for the fourth quarter.
Loop Capital has also revised its fourth-quarter revenue estimate for Tempus AI to $200.5 million, which adjusts the full-year projection to $700 million, indicating a 30% annual growth. These estimates do not account for the pending acquisition of Ambry Genetics, which is expected to be completed in the first quarter of 2025.
The decision to lower the price target was influenced by the revised revenue estimates and the recent compression in market multiples, as explained by Loop Capital. Nevertheless, the firm remains optimistic about Tempus AI's prospects, as reflected in the reiterated Buy rating.
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