Wall Street brokerages initiated coverage of SoftBank Group-backed Tempus AI on an optimistic note on Tuesday, forecasting that the company’s AI-enhanced library of clinical and molecular data could revolutionize diagnostics and testing capabilities. The Chicago-based firm offers genomic diagnostics in oncology, neuropsychiatry, radiology, and cardiology to clinicians and hospital systems.
Seven major brokerages, including J.P.Morgan, Morgan Stanley, BofA Global Research, and Stifel, began coverage with ‘buy’ or ‘overweight’ ratings, with TD Cowen setting the highest price target at $50. These underwriters, post-IPO, issued their first ratings after the ‘quiet period’ ended on Tuesday.
This positive coverage propelled Tempus AI’s shares up by 6.9%, reaching $35.57. Although the stock declined 17.5% since its June 14 debut, J.P.Morgan projects about 33% revenue growth through 2027 and anticipates core profitability by late 2025.
Tempus AI reported a net loss of $289.8 million for 2023, up from $214.1 million the previous year, alongside a revenue increase of 65.8% to $531.8 million. J.P.Morgan highlighted the company’s unique clinical-genomic data monetization through pharma and biotech licensing agreements as a competitive advantage.
Morgan Stanley predicts a 27% revenue growth through 2028 and expects the company to achieve core profitability by 2027. They noted that building competing databases would be a costly and time-intensive venture for rivals.
BofA Global Research indicated opportunities for Tempus to expand relationships with biotech and large pharma firms, as well as attract new customers.
(Disclaimer: With inputs from agencies.)