U.S.-based Tempus AI’s (TEM) stock surged nearly 12% after analyst Daniel Brennan at TD Cowen reinstated his Buy rating, citing the recent acquisition of Ambry. Brennan has kept his price target at $75, predicting an upside of 7%. Year-to-date, TEM stock has skyrocketed by 105%, driven by the disclosure of Congress member Nancy Pelosi’s options purchase and the launch of its AI-powered Olivia healthcare app. This week, investor sentiment was further buoyed by Tempus’ acquisition of Ambry Genetics.
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Tempus AI specializes in data-driven solutions for the healthcare industry, particularly in oncology and genomics. Meanwhile, Ambry Genetics is a leading genetic testing company focused on enhancing health by exploring the connection between genetics and disease.
TD Cowen Foresees Strong Gains for Tempus
TD Cowen highlighted that Ambry’s acquisition will speed up Tempus’ journey to profitability, with Ambry projected to generate over $40 million in EBITDA (earnings before interest, tax, depreciation, and amortization) in 2024. Additionally, Brennan stated that the acquisition enhances Tempus’ database by incorporating Ambry’s germline testing services, which could open up new product opportunities and synergies.
On the other hand, TD Cowen pointed out that Ambry’s projected long-term revenue growth of approximately 20% annually is slower than Tempus’ standalone growth rate. Also, the acquisition presents risks related to integration and execution. Nonetheless, he believes the acquisition will boost Tempus’s profitability and create synergies that offset the potential integration risks.
Overall, his Buy rating is supported by the acquisition, which strengthens Tempus’s product portfolio and broadens its market presence, paving the way for positive free cash flow.
Is Tempus a Good Stock to Buy?
On TipRanks, TEM stock has received a Moderate Buy rating based on five Buy and three Hold recommendations. The Tempus AI share price forecast is $63.13, which implies a decline of 8.75% from the current level.
