Key Stats for Tempus AI Stock
- YTD Price Change for Tempus AI stock: 85%
- $TEM Share Price as of Dec. 24: $64
- 52-Week High: $104
- $TEM Stock Price Target: $89
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What Happened?
Tempus AI (TEM) stock has been on a remarkable run this year, up nearly 87% despite a recent pullback of about 35% since October.
The AI-powered precision medicine company continues to attract investor attention following strong third-quarter results that showed it reached its first positive adjusted EBITDA milestone.
During recent investor conferences, CFO Jim Rogers provided detailed updates on the company’s growth trajectory and profitability path.
Tempus reported third-quarter revenue of $334.2 million, up 85% year-over-year, with strong performance in its genomics business, which more than doubled to $252.9 million.
The genomics segment—which includes oncology testing and hereditary screening through the Ambry acquisition—grew oncology volumes by 27%.
Ambry, acquired earlier this year, posted 33% growth driven partly by market share gains from competitor disruption in hereditary testing. The data and services business grew at a more modest but still healthy mid-20s rate, with the core data licensing business expanding 37%.
What caught Wall Street’s attention was Tempus achieving adjusted EBITDA profitability for the first time.
The company had set a goal to reach breakeven by its 10th anniversary, and it hit that milestone in Q3. Management outlined a disciplined profitability framework going forward: over the next three years,
Tempus plans to reinvest about two-thirds of incremental gross profit back into the business while letting one-third flow to adjusted EBITDA.
Rogers explained the company’s differentiation comes from its massive data advantage—over 45 million patient records and 400 petabytes of healthcare data, connected to more than 5,000 institutions.
Tempus AI stock has benefited from investors recognizing this data moat, particularly as the company works with 19 of the top 20 pharma companies on drug development using real-world data tied to genomic information.
The company also announced progress on several fronts. It’s submitting its liquid biopsy test (xF) to the FDA soon and awaiting reimbursement for its tumor-naive MRD test (xM).
About 30% of solid tumor DNA testing has migrated to the higher-priced ADLT version (xT CDx), which is reimbursed at $4,500, compared with $3,000 for the non-ADLT version. Management expects the “vast majority” of volume to shift to the premium version by the end of 2026.
On the data side, Tempus added over $150 million in new contract value during Q3, including a $66 million deal with a new biotech customer. This followed the $200 million AstraZeneca/Pathos AI deal announced in Q2 to build a foundation model using Tempus’s entire 400-petabyte database.
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What the Market Is Telling Us About TEM Stock
The pullback in Tempus AI stock over the past month likely reflects profit-taking after the massive year-to-date run rather than fundamental concerns. The company is executing well across multiple dimensions—volume growth, ASP expansion, profitability inflection, and data contract wins.
However, investors should note that the business still burns significant cash. Operating cash burn was $181 million over the first nine months of 2024, up from $150 million the prior year.
While adjusted EBITDA turned positive, reaching true free cash flow positive remains further out. This creates potential dilution risk if Tempus needs additional capital raises.
TEM stock scores a 3 out of 6 on traditional valuation metrics, suggesting it’s undervalued on roughly half of standard measures.
But with a market cap around $14 billion and no history as a public company before June 2024, valuation remains challenging.
Bulls argue that the data asset is irreplaceable and the AI applications could unlock massive value as reimbursement frameworks develop. Bears point to high cash burn and competition in genomic testing.
Management acknowledged some near-term headwinds, including weakness in the CRO business and the expectation that Ambry’s market share gains will moderate.
But the long-term vision remains compelling—using AI to transform healthcare diagnostics across oncology, cardiology, radiology, and rare diseases.
For growth investors comfortable with volatility and execution risk, Tempus AI stock represents a bet on precision medicine powered by AI and data.
The company has built genuine differentiation through hospital connectivity and longitudinal patient data. But conservative investors may want to wait for sustained free cash flow generation before jumping in, especially after shares have nearly doubled this year.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
