Tempus AI Rallies After Q1 Beat, Analyst Notes AI-Driven Platform And Expanding Pharma Deals

JP Morgan analyst Rachel Vatnsdal reiterated the Neutral rating on Tempus AI, Inc. TEM on Wednesday, with a price forecast of $55.

On Tuesday, Tempus AI reported first-quarter revenue of $255.74 million, beating estimates of $248.13 million. The AI-focused precision medicine and patient care company reported a first-quarter adjusted loss of 24 cents per share, beating analyst estimates for a loss of 27 cents per share.

The analyst notes that Tempus, a key player in clinical oncology diagnostics, offers a range of sequencing-based cancer detection and management tests targeting a $70 billion genomics market.

Also Read: Cathie Wood-Backed Tempus AI Says Pharma Contracts Solid Despite Biotech Funding Challenges, Tariff Pressures

Per Vatnsdal, Tempus stands out for its vast patient database that integrates clinical and genomic data. It has successfully monetized this database through licensing agreements with pharmaceutical and biotech firms to support their research and development efforts.

The analyst highlights that following the Ambry acquisition, Tempus is showing a strong topline growth rate of around 25% and improving profitability.

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However, despite these strengths, Vatnsdal maintains a Neutral rating, citing the stock's significant valuation premium compared to its industry peers.

She adds that Tempus' total contract value surpassed $1 billion as of April 30, following the addition of $200 million from the Pathos deal announced in April, which had no impact on first-quarter revenue.

While the company confirmed some standard revenue recognition from its TCV during the quarter, it did not disclose the exact remaining amount—only that it now exceeds $1 billion, up from over $940 million at the end of 2024, the analyst adds.

Price Action: TEM shares are trading higher by 8.35% to $56.54 at last check Wednesday.

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