[Qiltrack AI] Tempus AI Inc (TEM) 3-Minute Overview

This report is auto-generated by an AI stock research platform for informational purposes only. The content is for general information and research reference, and does not constitute financial advice. Data may lag or be incomplete. Always conduct your own research and consult qualified professionals before making any financial decisions. # [Qiltrack AI] Tempus AI Inc (TEM) 3-Minute Overview > **💡 One-Sentence Summary** > > Tempus AI is a high‑growth, still‑unprofitable precision‑medicine and AI data platform that sells genomic tests and data tools to hospitals and drugmakers, aiming to be the “operating system” for cancer and other diseases. > **📍 Basic Profile** > > Market Cap **$10.7 billion** · Life Sciences Tools & Services / AI‑driven precision medicine · NASDAQ · Price **$58.37** --- > **⚡ 3 Things You Should Know** > > 1. 📈 **Real business, not just an AI story:** Revenue has grown very fast for years (multi‑year CAGR ~40–60%), with strong gross margin around 62%—this is a real diagnostics / data platform business, not a pure “concept stock.” > > 2. 🔥 **Still losing money, highly levered on equity:** Net margin is about **-18%**, ROE is a very negative **-68%**, and P/B is sky‑high (~94x) because the company is burning equity—this is a classic “grow now, profits later” bet, with meaningful execution and dilution risk. > > 3. 🎢 **Sentiment and expectations are hot:** Analysts are mostly positive (0 Sell, many Buy/Strong Buy), new AI products and big‑name hospital partnerships are driving buzz, but the stock has already swung from a 52‑week low of **$36** to a high of **$104** and back to **$58**, so volatility and expectation risk are very real. --- > **🎯 Quick Health Check** > > | Dimension | Rating | Details | > |-----------|--------|---------| > | Profitability | Weak👎 | Net margin **-18.5%**, ROE **-68%**, still in investment/scale‑up phase | > | Growth Rate | Fast🚀 | Multi‑year revenue growth **~40–60%**, repeated EPS beats (less negative than expected) | > | Financial Health | Healthy💚 (liquidity) / Risky on equity🧡 | Current ratio **3.28** is comfortable, but leverage vs equity is high (D/E **7.7x**, negative interest coverage) | > | Valuation | Pricey | No PE (loss‑making), **P/S ~9.7x**, **P/B ~94x**, clearly priced as a high‑expectation growth story | --- ## 📋 Layer 2: 2-Minute Deep Dive ### 📊 How Does This Company Make Money? **Business Model in One Sentence:** Tempus sells high‑value genomic and molecular tests plus AI‑driven data/analytics services to hospitals, physicians, and pharma companies, making money per‑test and via data/platform contracts. **Revenue Breakdown (conceptual, based on business model – exact mix not in data):** | Business | Share | Trend | Comment | |----------|-------|-------|---------| | Oncology & hereditary diagnostics | [Data unavailable] | ↑ | ASPs rising (per JPM conference), strong volume growth, core near‑term driver. | | Data platform & pharma/biopharma services | [Data unavailable] | ↑ | Leverages its large clinical/genomic database; higher margin over time if scaled. | **Profitability Metrics:** | Metric | Value | Ranking | Interpretation | |--------|-------|---------|----------------| | Gross Margin | **61.7%** | Top tier for diagnostics | Strong pricing power and a data/software component; gross economics are attractive. | | Operating Margin | **-23%** | Below average | Heavy R&D, commercial, and platform investment; not yet at operating scale. | | Net Margin | **-18.5%** | Below average | Still loss‑making; path to profitability will depend on operating leverage. | | ROE | **-68%** | Very weak | Burning equity; returns on capital are negative today—typical of early, aggressive growth but unsustainable long term. | --- ### 📈 How's the Growth? **Growth Assessment:** **High Growth** (but from a smaller base, and still loss‑making) | Metric | Latest | vs Last Year | Trend | |--------|--------|--------------|-------| | Revenue Growth (3Y CAGR) | **~39%** | — | Strong 📈 | | Revenue Growth (5Y CAGR) | **~62%** | — | Very strong, early‑stage scaling 📈 | | EPS Growth | [Data unavailable] | — | Company still loss‑making; EPS “improvement” is becoming less negative. | **Earnings Track Record (last 4 quarters):** | Quarter End | EPS Expected | EPS Actual | Surprise | |-------------|-------------|-----------|----------| | 2025‑09‑30 | -0.1695 | **-0.11** | Beat by ~35% 😀 | | 2025‑06‑30 | -0.2449 | **-0.22** | Beat by ~10% 😀 | | 2025‑03‑31 | -0.2891 | **-0.24** | Beat by ~17% 😀 | | 2024‑12‑31 | -0.2033 | **-0.18** | Beat by ~11% 😀 | **Growth Quality (so what?):** - Repeated **EPS beats** suggest the company is either: - managing costs better than expected, and/or - generating higher margins than the Street modeled. - Revenue CAGRs in the **40–60%** range plus **>60% gross margin** is a strong combo, *if* it can be sustained while moving toward breakeven. - But we don’t see detailed breakdown of how much is organic diagnostic growth vs. pricing increases vs. new pharma/data deals. In other words: the growth looks **real and high‑quality so far**, but you’re still paying for the *promise* of eventual operating leverage. --- ### 💰 Financial Health Check **One Sentence:** Tempus is like a high‑earning startup doctor with a big research grant: cash coming in is growing fast, current liquidity looks fine, but it’s still spending more than it makes and leaning heavily on equity, so it needs the growth story to keep working. | Metric | Value | Safe Zone | Assessment | |--------|-------|-----------|------------| | Debt to Equity | **7.73x** | <0.6–1.0 preferred | ⚠️High (equity base is small/negative; leverage looks optically big) | | Long‑Term D/E | **7.73x** | <1.0 | ⚠️High | | Current Ratio | **3.28** | >1.5 healthy | ✅Safe – near‑term liquidity looks solid | | Quick Ratio | **2.07** | >1.0 | ✅Safe – good short‑term coverage | | Interest Coverage | **-14.1** | >3 comfortable | 🚨Negative – operating income doesn’t cover interest yet | | Cash Flow | [Data unavailable] | >0 | [Can’t fully judge; margins imply cash burn is likely] | **So what:** - **Short term:** Balance sheet doesn’t look like a near‑term survival story; liquidity is fine. - **Medium term:** With negative interest coverage and high D/E, they **must** either grow into their cost base, improve margins, or raise additional capital (equity or converts) at some point. - Equity dilution is a **real risk** for long‑term holders if profitability is slower than expected. --- ### 🏷️ Is It Expensive Now? **Price Position (52-week):** - 52‑Week Low: **$36.22** - 52‑Week High: **$104.32** - Current: **$58.37** → roughly in the **mid‑low** part of the range. If we map that into simple buckets: | Position Range | Cheap Zone | Fair Zone | Pricey Zone | |----------------|------------|-----------|-------------| | Criteria | 0–33% (near low) | 33–66% | 66–100% (near high) | | **Current** | ● (~28% from low to high) | | | So the stock has **pulled back a lot** from euphoric levels, but it’s still well above the lows. **Valuation Comparison:** | Comparison | Current | Reference | Assessment | |------------|---------|-----------|------------| | PE (TTM) | **N/A (loss‑making)** | — | You’re valuing on sales / story, not earnings. | | P/S (TTM) | **~9.7x** | Many diagnostics 3–6x; high‑growth platforms 8–15x | On the higher side, but within “growth platform” territory. | | P/B | **~94x** | Typical mature tools 3–6x | Extremely high, reflecting intangible value (data, AI platform) and low tangible equity. | **What the Current Valuation is Betting On:** At around **10x sales** with strong growth: - The market is betting Tempus can: - sustain **high double‑digit revenue growth** for several years, **and** - move margins from **-18%** net toward **break‑even and eventually strong profitability**, **and** - build a durable data/AI moat that justifies software‑like multiples. If growth slows sharply or margins don’t improve, this type of valuation can compress a lot. --- ### 📰 Any Recent News? | Date (approx.) | Event | Impact | |----------------|-------|--------| | 2026‑02 | **Mizuho initiates coverage with Outperform, $100 PT** | Positive – adds another bullish voice and a high target, supports sentiment. | | 2026‑02 | **Stock jumps on coverage & HRD‑RNA algorithm news** | Positive – validates AI‑driven product pipeline and clinical relevance. | | 2026‑01 | **Baird initiates Outperform, $59 PT** | Positive but more conservative target; roughly near current price. | | 2026‑01 | **Ambry Genetics hits 1M DNA/RNA tests** | Positive – proof of scale in hereditary cancer/rare disease testing. | | 2026‑01 | **JPM Healthcare Conference: strong growth, higher oncology ASPs** | Positive – shows pricing power and demand; helps gross margin story. | | 2026‑01 | **Partnerships with NYU Langone & Northwestern Medicine** | Positive – deepens hospital network, strengthens data moat and clinical adoption. | | 2026‑01 | **Pelosi‑linked buying hype; stock doubles then swings** | Mixed – more attention and liquidity, but also adds “speculative” volatility. | Overall: **News flow is strongly positive**, focused on growth, partnerships, and AI products—but that also means expectations are being pushed up. --- ## 📊 Layer 3: 3-Minute Complete Analysis ### I. Detailed Financial Data Exact multi‑year figures aren’t provided, but we can summarize the **direction**: **Profitability Trends (directional):** | Metric | This Period | Last Year | Year Before | 3-Year Trend | |--------|------------|-----------|-------------|--------------| | Gross Margin | **61.7%** | [Unavailable] | [Unavailable] | Likely ↑ or stable at a high level (ASP increases mentioned) | | Net Margin | **-18.5%** | [Unavailable] | [Unavailable] | Likely improving from more negative levels as scale builds | | ROE | **-68%** | [Unavailable] | [Unavailable] | Still deeply negative; reflects high investment phase | **Growth Trends:** | Metric | This Period | Last Year | Year Before | 3-Year Trend | |--------|------------|-----------|-------------|--------------| | Revenue Growth | **~39% (3Y CAGR)** | [Unavailable] | [Unavailable] | High growth ↑ | | Revenue Growth (5Y) | **~62% CAGR** | — | — | Very rapid early scale ↑ | | EPS Growth | Negative but improving | — | — | Losses narrowing vs expectations ↑ | We don’t have exact year‑by‑year margins, but the combination of **repeated EPS beats** and **high revenue growth** suggests that operating leverage is starting to show up—just not enough yet to turn the business profitable. --- ### II. Earnings Track Record **Last 4 Quarters vs Expectations:** | Quarter | EPS Expected | EPS Actual | Surprise | |---------|--------------|-----------|----------| | 2025‑Q3 | -0.1695 | **-0.11** | Beat by ~0.06 (≈35% better) 😀 | | 2025‑Q2 | -0.2449 | **-0.22** | Beat by ~0.02 (≈10% better) 😀 | | 2025‑Q1 | -0.2891 | **-0.24** | Beat by ~0.05 (≈17% better) 😀 | | 2024‑Q4 | -0.2033 | **-0.18** | Beat by ~0.02 (≈11% better) 😀 | **Earnings Trend Interpretation:** - Four straight quarters of **beating expectations**, with sometimes sizable beats, usually leads to: - Upward revisions in analyst models (better margins / higher revenue). - A “management can execute” narrative. - However, note that **beating a negative EPS** still means the company is losing money. - Markets can be forgiving for a while as long as growth is high and beats keep coming. - If growth slows or a **miss** appears, sentiment in these names can reverse quickly. --- ### III. What the Market Thinks **Analyst Ratings (latest period 2026‑02‑01):** Total firms = 5 (Strong Buy) + 7 (Buy) + 9 (Hold) + 0 (Sell/Strong Sell) = **21** | Rating | Count | Percentage | |--------|-------|------------| | Strong Buy | 5 | ~24% | | Buy | 7 | ~33% | | Hold | 9 | ~43% | | Sell | 0 | 0% | | Strong Sell | 0 | 0% | So: **Most are positive or neutral; nobody is officially bearish.** There’s enthusiasm, but also a **large “wait and see” camp (Holds)**. **Target Price:** - Explicit: Mizuho **$100**, Baird **$59**. - Others: [Not in data]. - With a current price around **$58**, you can think loosely as: - Some upside if the bullish cases play out (to ~100). - Some think fair value is near current (~59). So implied: **moderate to high upside if execution is strong**, but the Street clearly sees risk (hence many Holds). **Insider Activity (recent months):** All reported recent transactions are **sales**, including by: - **Eric Lefkofsky (founder)** – multiple sales across Dec 2025 and Jan 2026. - Other executives (e.g., Ryan Fukushima) and board members (e.g., Jennifer Doudna). Net: **clear net selling** over the last few months. > Insider selling doesn’t automatically mean “bad” (can be diversification, tax, planned sales), especially after a big IPO/run‑up. But combined with: > - high valuation, > - volatile share price, > it’s a **yellow flag**: insiders are not aggressively buying at these levels. --- ### IV. Key Risk Alerts 1. **Profitability & Cash Burn Risk:** Tempus is still loss‑making (net margin about -18%) with negative interest coverage and very high negative ROE. → If revenue growth slows or costs stay high, the path to profitability could be much longer than the market expects, leading to valuation compression and potential future capital raises/dilution. 2. **Valuation & Sentiment Risk:** Trading around **10x sales** and with a history of running to $100+ and back to the $50s, the stock is highly sentiment‑driven. → Any disappointment (slower growth, regulatory issues, competitive pressure) could cause large drawdowns; this is not a “sleep‑well” compounder yet. 3. **Execution & Competition in AI Precision Medicine:** Tempus is going after a hot space (AI + genomics + clinical decision support) with big incumbents (e.g., large diagnostics firms, big tech/AI entrants, health‑system initiatives). → If Tempus fails to maintain its data advantage, secure enough hospital/pharma partnerships, or convert data into profitable software‑like revenue, its assumed “platform moat” could be weaker than the valuation implies. --- ## 🎬 Summary & Next Steps > **📝 Three-Sentence Summary** > > **What it is:** Tempus AI is an AI‑driven precision‑medicine and diagnostics platform growing revenue very fast with attractive gross margins, but still losing money. > > **Key strength:** It combines strong growth, high gross margin, and expanding hospital/pharma relationships, plus a differentiated clinical/genomic data asset that can support AI algorithms like its new HRD‑RNA test. > > **Key risk:** The stock is priced as a high‑expectation growth story while the company remains unprofitable and insiders are net sellers, so if growth or margins disappoint, both valuation and sentiment could reverse sharply. --- > **🔍 Want to Learn More?** > > • Want to know if Tempus’s data/AI platform is a true long‑term moat or just a fast‑growing product? → Try **【Buffett Mode】** for deeper moat and unit‑economics analysis. > • Worried about downside and hidden landmines (dilution, regulation, reimbursement)? → Try **【Muddy Mode】** for detailed risk screening. > • Thinking of it as a high‑beta growth bet and want to sanity‑check upside vs. risk? → Try **【Musk Mode】** to model growth scenarios and potential returns.