Why Wall Street Is Bullish on Healthcare Tech Stock Tempus AI

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Key Takeaways

  • Several analysts kicked off coverage of Tempus AI with bullish comments, anticipating gains from its applications of artificial intelligence (AI) in healthcare. 
  • The healthcare tech company, which uses AI to provide personalized medical solutions for oncology, began publicly trading in June.
  • William Blair analysts said Tempus has “compelling revenue growth” with a path to profitability.
  • Stifel and Bank of America analysts highlighted the company’s unique position to gain from integrating AI into healthcare.

Several analysts kicked off coverage of Tempus AI (TEM) with bullish comments, anticipating gains from the biotech company’s applications of artificial intelligence (AI) to healthcare. 

William Blair and J.P. Morgan analysts gave Tempus AI stock an “overweight” rating, with J.P. Morgan setting its price objective for Tempus at $42. Meanwhile, Bank of America assigned the stock a “buy” rating and set its price target at $41, while Stifel also gave Tempus a “buy” rating and set a price objective of $45.

Shares of Tempus AI surged in early trading Tuesday, but were down about 1% at $33.54 as of 2:20 p.m. ET. The stock, which began trading in June, has fallen about 10% from its initial public offering (IPO) price of $37.

Leveraging AI Tech To Advance Healthcare

The analysts highlighted Tempus’ positioning to gain as a healthcare company utilizing AI, and potential to benefit from investor interest in AI-related stocks and healthcare innovations.

Tempus claims “one of the world’s largest libraries of multimodal data” and an operating system that provides medical professionals with “AI-enabled precision medicine solutions” to deliver personalized patient treatment.

The healthcare company made its trading debut on the Nasdaq in June, with Alphabet’s (GOOGL) Google among its investors. Tempus AI’s founder and Chief Executive Officer (CEO) Eric Lefkofsky also founded Groupon (GRPN), an e-commerce marketplace.

Stifel analysts indicated that the company could be well-positioned to gain, saying Tempus has taken aim at “personalized genetic and clinical information within oncology” as an “opportunity with a business that combines established approaches within Dx and drug development with emerging AI capabilities.”

On Track To Profitability

William Blair analysts noted Tempus’ “compelling revenue growth with line of sight to profitability,” projecting the company’s revenue growth to outperform its industry peers.

Stifel highlighted the company’s “portfolio is uniquely synergistic within itself, allowing both physicians treating cancer patients and biopharma companies developing cancer drugs to benefit from the insights gained through the use of Tempus products,” and indicated that the company will likely expand beyond oncology into other areas.

Bank of America analysts echoed a similar sentiment, saying “the time is now to bring AI to Healthcare.”