- Wall Street brokerages have initiated bullish coverage on SoftBank-backed Tempus AI, forecasting significant growth driven by its AI-powered clinical and molecular data library.
- J.P. Morgan and other brokerages highlight Tempus’ unique genomic data monetisation and predict robust revenue growth.
OUR TAKE
AI applied in health sector presents the latest trend of technology in the AI sector. Wall Street’s positive attitude toward Tempus AI again supports a strong momentum in investing in the company. Yet, only 1% of its revenue stems from AI applications, casting doubt on its transformative claims.
— Ashley Wang, BTW reporter
What happened
Wall Street brokerages have initiated coverage on SoftBank Group-backed Tempus AI with a bullish outlook, predicting significant growth driven by the company’s AI-powered library of clinical and molecular data. The Chicago-based firm, which offers genomic diagnostic tests across oncology, neuropsychiatry, radiology, and cardiology, received “buy” or “overweight” ratings from seven brokerages, including J.P. Morgan, Morgan Stanley, BofA Global Research, and Stifel. TD Cowen set the highest price target at $50.
This optimistic coverage boosted Tempus AI’s shares by as much as 7%, reaching $35.75. Despite this rise, the stock had declined 17.5% since its debut on June 14 until the end of trading on Monday. J.P. Morgan still posits a positive attitude toward the company, forecasting approximately 33% revenue growth for Tempus through 2027, and anticipating the company will achieve core profitability by the second half of 2025.
Tempus AI reported a net loss of $289.8 million in 2023, up from $214.1 million the previous year, while total revenue surged 65.8% to $531.8 million. Notably, revenue from its AI applications business accounted for about 1% of total revenue, which Tempus described as “immaterial.”
Also read: Emerging trends: The increasing role of AI in healthcare
Also read: SoftBank sets up AI healthcare joint venture with Tempus AI
Why it’s important
J.P. Morgan highlighted Tempus’ unique clinical genomic data and its successful monetisation through licensing agreements with pharmaceutical and biotech companies as a key differentiator from competitors. Morgan Stanley expects Tempus to experience 27% revenue growth through 2028, projecting core profit break-even by 2027. The brokerage noted that rivals attempting to develop their own databases would face costly, cumbersome, and time-consuming challenges.
BofA Global Research sees opportunities for Tempus to expand existing relationships with biotech and pharmaceutical companies and attract new customers. The brokerages’ confidence in Tempus AI underscores the potential for significant growth and impact in the field of genomic diagnostics and AI-powered medical solutions, setting the stage for Tempus to capitalise on its innovative data-driven approach.
