Wall Street analysts optimistic about genetic testing firm Tempus AI

Wall Street Brokerages Show Optimism for Tempus AI

Wall Street brokerages have expressed a positive outlook on Tempus AI, supported by SoftBank Group, as they begin coverage of the company. The Chicago-based firm specializes in genomic diagnostics, offering tests across multiple medical fields, such as oncology, neuropsychiatry, radiology, and cardiology. Their advanced AI-driven library of clinical and molecular data shows promise for developing superior diagnostic and test kits.

Promising Ratings and Targets

Major brokerages, including J.P.Morgan, Morgan Stanley, BofA Global Research, and Stifel, initiated their coverage with optimistic ratings, categorizing Tempus as "buy" or "overweight." TD Cowen set the highest price target at $50. This positive sentiment follows the end of the "quiet period" after Tempus' initial public offering. As a result, Tempus’ shares rose 6.9% to $35.57. However, the stock has seen a decrease of 17.5% since its debut on June 14 until the end of trade on the preceding Monday.

Growth Projections and Profit Forecasts

J.P.Morgan projects a revenue growth rate of approximately 33% for Tempus up until 2027. They anticipate the company will achieve core profitability by the latter half of 2025. Despite a widened net loss of $289.8 million in 2023, compared to $214.1 million the previous year, Tempus experienced a significant revenue jump of 65.8%, reaching $531.8 million. J.P.Morgan highlights Tempus’ effective monetization of its combined clinical and genomic data through licensing deals with pharmaceutical and biotechnology firms, distinguishing it from competitors.

Morgan Stanley predicts a 27% revenue growth rate through 2028 and expects Tempus to break even on core profits by 2027. They argue that rivals attempting to develop similar databases would face considerable expenses, complexity, and delays. Meanwhile, BofA Global Research sees potential for Tempus to broaden its partnerships with biotech and pharmaceutical companies and attract new clients.

The optimistic ratings from these influential financial institutions underscore the high expectations for Tempus AI in the foreseeable future.