13x price to rev's, big growth over last year, but that slows down to good growth looking fwd.
Already expecting to be cash flow positive this year. And eps positive by 2027.
Only public for a year, but the stock has already had some big pops.....only to come back down to earth. Might be now showing signs of building some sustainable momentum.
I'm interested.
Yeah, it topped out at $90, so the current $60 doesn't seem to be a bad entry point. Buy a little and add as appropriate.
AI-generated report from Seeking Alpha:
Company Description
Tempus AI, Inc., headquartered in Chicago, Illinois, operates as a healthcare technology company that was incorporated in 2015. The company provides next-generation sequencing diagnostics, polymerase chain reaction profiling, molecular genotyping, and other pathology testing services. It is primarily focused on AI-driven precision medicine, aiming to enhance diagnostics accuracy and personalization through the integration of artificial intelligence. Tempus AI's Platform offers a suite of products and services, including Genomics, Data and Services, and AI Applications, designed for healthcare providers, pharmaceutical companies, and researchers.
The company has established a large library of clinical and molecular data, which it uses to provide data-driven insights for treatment decisions. Tempus AI's Genomics product line offers diagnostic testing services, while its Data and Services line facilitates drug discovery and development through de-identified data licensing and clinical trial matching. The AI Applications line focuses on developing diagnostics that utilize algorithmic approaches to enhance patient care.
Tempus AI has formed strategic collaborations with major pharmaceutical companies, including AstraZeneca and Personalis, to advance therapeutic programs in oncology. The company was formerly known as Tempus Labs, Inc. and changed its name to Tempus AI, Inc. in January 2023.
Competitors and Unique Value
Tempus AI faces competition from several companies in the genomic and AI-driven healthcare space. Its main competitors include:
Tempus AI's unique value lies in its comprehensive data platform that integrates multimodal healthcare data, including genomic, molecular, and clinical information, to generate AI-driven insights for precision medicine. This integrated approach allows Tempus AI to provide personalized diagnostics and treatment recommendations, thereby enhancing patient outcomes. The company's extensive partnerships and collaborations further strengthen its position in the healthcare data and analytics sector, offering a competitive edge through its ability to deliver data-driven solutions at scale.
Seeking Alpha Quant Rating Explanation
TEM is rated Hold. The stock exhibits a mixed landscape across valuation, growth, momentum, profitability, and revisions, leading to a neutral outlook.
Valuation
D
Growth
B-
Profitability
B
Momentum
A
Revisions
D+
Sector Metrics Comparative Analysis:
- Valuation: TEM presents a challenging valuation landscape. Its Price to Book ratio of 38 is vastly higher than the sector median of 3, reflecting a very expensive stock. These stretched valuations suggest the stock might be overpriced compared to its peers.
- Growth: Growth metrics are extraordinarily robust with Year-over-Year (YoY) Revenue Growth of 43%, incredibly above the sector of 7%, and Working Capital Growth at 316%, significantly outperforming the sector. This phenomenal growth trajectory highlights TEM's successful expansion and increasing financial performance.
- Profitability: TEM's profitability is mixed. While the Asset Turnover Ratio of 0.8 is 81% higher than the sector, indicating efficient use of assets, the negative Net Income Margin of -88% is far below the sector's -2%, reflecting substantial profitability challenges.
- Momentum: TEM's momentum is exceptionally strong, with a one-year price performance of 52%, significantly above the sector's -17%. This indicates a bullish sentiment and strong investor confidence in the company’s future prospects.
- Revisions: Recent trends in earnings estimates are mixed, with 2 upward EPS revisions and 5 downward in the past three months, alongside 10 upward and 1 downward revenue revisions. This suggests cautious optimism about TEM's revenue potential but concerns about earnings.
In summary, while TEM showcases impressive growth and strong momentum, its valuation is substantially overvalued compared to its peers, and profitability challenges remain. Given these factors, TEM is rated Hold, reflecting a balanced perspective on its potential performance against sector peers.
Positives raised by analysts on Seeking Alpha
- Tempus AI's strategic acquisition of Ambry Genetics has significantly boosted its hereditary testing capabilities, leading to impressive revenue growth and expanding its data assets, which strengthens its position in the AI healthcare market.
- The company's partnership with AstraZeneca to develop a multimodal foundation model in oncology underscores its strong position and potential for long-term growth in the healthcare AI sector.
- Tempus AI's financial performance is robust, with a 75% year-over-year revenue increase, driven by strong sales across its product lines, and expectations to become EBITDA positive by the end of 2025.
Concerns raised by analysts on Seeking Alpha
- Tempus AI's high valuation poses a risk, as its stock is priced for perfection, leaving little room for error, especially given the company's ongoing cash burn and lack of profitability.
- Despite rapid growth, Tempus AI's reliance on recent acquisitions like Ambry Genetics for revenue expansion raises concerns about potential slowdowns in organic growth once acquisition effects are lapped.
- The company's substantial leverage and premium valuation multiples make it a high-risk investment, suitable only for speculative investors with a long-term, risk-tolerant outlook.
