Dmitry Vinogradov
Multiple bullish initiations on Tempus AI (NASDAQ:TEM) failed to impress Wall Street as the AI-driven life sciences firm traded lower on Tuesday, extending a recent selloff that followed its public debut last month.
Since its IPO in mid-June, SoftBank (OTCPK:SFTBY) (OTCPK:SFTBF)-backed Tempus (TEM) has lost nearly 20%, a volatility that J.P. Morgan said could indicate a favorable setup for the stock given its growth potential in Genomics.
“What separates TEM from other diagnostics players is its scaled patient database of uniquely combined clinical genomic data,” analyst Rachel Vatnsdal wrote, launching her coverage with an overweight recommendation and a $42 target.
J.P. Morgan expects Tempus (TEM) to record ~33% CAGR from 2024 to 2027 and become EBITDA positive by H2 2025 on an adjusted basis, driven by its topline growth and margin-rich Data business.
Bank of America launched with a buy rating and $41 target, arguing that TEM trading ~6x EV in terms of 2025 sales indicates a rich valuation. However, according to BoA, this is justifiable given the company’s robust financials, the hybrid nature of the business, and the lack of pure-play comps.
Morgan Stanley and Stifel also initiated coverage on Tempus (TEM) with buy-equivalent recommendations, with price targets set at $44 and $45 per share, respectively.