Key Takeaways
- BTIG upgraded Tempus AI’s price target from $70 to $80 while reaffirming its Buy recommendation, propelling shares up 6.9% to $66.21
- The rally correlates with breakthrough Phase 3 cancer trial data from Merck and Moderna featuring an mRNA therapy that relies on Personalis’ sequencing technology
- Last month, Tempus AI announced plans to purchase Personalis for $1.5 billion, establishing a direct link between the trial outcomes and TEM’s future
- Second-quarter results surpassed projections: adjusted loss of $0.04 per share versus the anticipated -$0.14, alongside revenue of $382.49 million reflecting 21.6% annual growth
- Wall Street consensus remains at Hold with a mean price objective of $65.69; rating breakdown includes nine Buy recommendations, six Hold, and two Sell
Shares of Tempus AI (TEM) advanced 6.9% to reach $66.21 on Thursday following BTIG Research’s decision to increase its price objective from $70 to $80 while maintaining a Buy stance. Trading activity was robust, with more than 4.5 million shares exchanged by the midday mark.
TEM had settled at $61.25 during the previous trading session, making Thursday’s rally among the most significant single-day advances for the stock in recent memory.
The upward movement wasn’t solely attributable to the analyst revision. Market participants are drawing connections between breakthrough clinical data and Tempus AI’s forthcoming $1.5 billion purchase of Personalis.
On Wednesday, Merck and Moderna unveiled Phase 3 data for intismeran autogene, a personalized mRNA-based cancer therapy administered alongside Keytruda. The INTerpath-001 study demonstrated that the combination enhanced recurrence-free survival among melanoma patients following surgical resection.
This marked the first triumphant Phase 3 outcome for an individualized mRNA cancer treatment approach.
Moderna leverages Personalis’ sequencing infrastructure to evaluate tumor samples and pinpoint the precise neoantigens required for creating each patient-specific therapeutic dose. This relationship positioned Tempus AI at the center of investor discussions.
Tempus AI had earlier collaborated with Personalis on commercializing minimal residual disease diagnostics. Last month, the company escalated this relationship by announcing its intention to acquire Personalis completely for $1.5 billion.
Strong Quarterly Performance
Tempus AI unveiled its latest quarterly financials on July 30. The organization recorded an adjusted loss of $0.04 per share, surpassing the Street’s projection of -$0.14 by $0.10.
Revenue totaled $382.49 million, exceeding analyst expectations of $379.69 million. This figure marked a 21.6% increase compared to the prior-year period.
During the comparable quarter last year, the company registered a loss of $0.22 per share. The business continues to operate with a negative net margin of 17.77% and a negative return on equity standing at 50.28%.
Wall Street analysts collectively forecast that Tempus AI will report a full-year loss of $1.38 per share.
Wall Street Perspectives
Apart from BTIG, sentiment among the analyst community regarding TEM remains divided. Piper Sandler reduced its price objective from $58 to $56 on August 4, assigning a neutral stance. Guggenheim elevated its target to $65 with a Buy recommendation in July.
Wolfe Research initiated coverage in June with a peer perform designation. Weiss Ratings adjusted the stock from sell (e+) to sell (d-) during August.
Overall, nine analysts maintain Buy ratings on TEM, six assign Hold ratings, and two recommend Sell. The consensus stands at Hold, with an average price target of $65.69.
Company insiders have been actively divesting shares. CFO James Rogers liquidated $634,095 in stock during June. CEO Ryan Fukushima sold shares valued at $1.91 million in July. Throughout the past three months, insiders have collectively offloaded $33.26 million worth of stock.
At its current price of $66.21, TEM is positioned above both its 50-day moving average of $52.10 and its 200-day moving average of $51.16.
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