Tempus AI stock rating upgraded, PT raised to $74 by TD Cowen

On Wednesday, TD Cowen reinitiated coverage on Tempus AI Inc (NASDAQ:TEM) with a Buy rating, increasing the price target to $74 from a previous target. The stock, currently trading at $61.85, has shown remarkable momentum with an 83.2% gain year-to-date. According to InvestingPro data, analyst targets for TEM range from $50 to $70, with a consensus recommendation leaning towards Buy. The upgrade comes after Tempus AI completed the acquisition of Ambry Genetics, a deal that TD Cowen believes positions the company for enhanced product offerings and entry into new markets.

Analysts at TD Cowen highlighted the transaction, which brings a profitable germline testing laboratory with over $300 million in revenue and an EBITDA percentage in the low to mid-teens, to Tempus AI’s portfolio. The acquisition is seen as a strategic move that not only augments Tempus AI’s existing product lineup but also paves the way for positive free cash flow (FCF).

The firm’s analysis suggests that despite Ambry Genetics’ relatively slower growth rate, the overall impact of the acquisition is favorable. The combination of a larger revenue base and potential for both growth and margin expansion was cited as the rationale behind the increased price target for Tempus AI shares. InvestingPro analysis indicates the company maintains healthy liquidity with a current ratio of 2.69, though technical indicators suggest the stock may be overbought at current levels. Subscribers can access 10+ additional ProTips and comprehensive financial metrics to make informed investment decisions.

The analyst’s statement emphasized the benefits of the acquisition, noting, "The deal affords TEM with a $300M+, profitable germline testing lab (low/mid teens EBITDA %) & offers opportunities to enhance TEM’s existing products, expand into new areas & provides path to +FCF, with the main drawback Ambry’s slower growth."

With the market responding to the updated coverage and price target, Tempus AI Inc’s stock is set to reflect the new developments as investors digest the implications of the Ambry Genetics acquisition and TD Cowen’s positive outlook. The company’s last twelve months revenue stands at $640.44 million, with a gross profit margin of 53.18%, though it remains unprofitable with negative EBITDA.

In other recent news, Tempus AI has been making significant strides. The company recently completed its acquisition of Ambry Genetics, a move that enhances Tempus AI’s capabilities in delivering innovative solutions to healthcare professionals and patients. The transaction involved a cash payment of $375 million and $225 million in shares. Ambry Genetics will continue to operate as a wholly-owned subsidiary under its current leadership team.

In collaboration news, Genialis has continued its partnership with Debiopharm to create a predictive biomarker for WEE1-targeted therapies. The partnership also included Tempus AI in a multi-year agreement to validate new RNA-based biomarker algorithms across different cancer types.

Tempus AI also announced the national launch of its personal health concierge app, olivia. The app aims to centralize patient health data and provide actionable AI-driven insights. It is now available for download on both iOS and Android platforms.

However, Loop Capital has revised its price target for Tempus AI shares to $52.00 from $57.00, while maintaining a Buy rating. This adjustment follows Tempus AI’s preliminary fourth-quarter revenue disclosure, which fell short of anticipated figures. Despite this, the firm remains optimistic about Tempus AI’s prospects. These are the recent developments shaping Tempus AI’s trajectory.

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