Stock Analysis
Tempus AI, Inc. (TEM)
NASDAQ: TEM · Healthcare - Precision Oncology Diagnostics and Data
Updated
Rated Avoid, with a fair value of $58.82 against a last close of $67.61 (-13% implied upside). A fast-growing oncology testing and data business whose shares, even after a 20% fall, sit above fair value as the Personalis deal adds about 14% to the share count; interesting at $49 to $51.
- Verdict
- Avoid
- Fair Value
- $58.82
- Investment Score
- 52.5/100prev 56.8
Technical read (chart only): Neutral as of A pullback inside a longer uptrend, neither confirming nor contradicting the Avoid; watch the $61.51 20-session low, with a close under the 200-day average near $56.81 bringing the chart in line with the fundamentals.The Avoid verdict comes from the fundamentals alone. The technical read looks only at the price chart. It does not change the verdict or the score and only guides entry timing.
Investment Scorecard
Composite score 52.5/100 (previous 56.8). Every factor is scored out of 10, ten always being the best outcome, including for risk.
| Factor | Score | Weight | Change | Basis |
|---|---|---|---|---|
| Business Quality | 6/10 | 15% | -1 vs last report | Fast-growing oncology testing and high-margin data, but diagnostics remain reimbursement-dependent and the pending MRD business loses money per test. |
| Financial Strength | 4/10 | 15% | -1 vs last report | $821m cash and securities against about $1.36bn of convertible debt; free cash flow still negative (-$102m in H1 2026). |
| Competitive Advantage | 7/10 | 15% | unchanged | Breadth of linked clinical and molecular data; BMS now one of the largest licensors of its oncology data. |
| Management | 6/10 | 10% | unchanged | Guidance delivered and raised; offset by stock-funded deals, steady insider selling and related-party contracts with Pathos. |
| Growth Potential | 8/10 | 15% | unchanged | About 25% revenue growth in 2026, consensus about 23% in 2027, plus reimbursement uplifts from 2027. |
| Valuation | 3/10 | 20% | unchanged | 6.5x 2027 consensus revenue; weighted fair value 13% below the price. |
| Risk (10 = lowest risk) (10 = lowest risk) | 3/10 | 10% | unchanged | High short interest and volatility, reimbursement dependence, dilution and integration risk. |
Recent Developments
| Date | Development | Impact |
|---|---|---|
| Personalis acquisition (MRD) Registration effective 22 Oct; Personalis vote 30 Nov (record date 15 Oct). $16.25 a share in Tempus stock at 16.25 divided by the 15-day average price, ratio capped at 0.3356 below $48.42; up to 50% cash at Tempus's option; 108.4m Personalis shares; antitrust clearance outstanding; outside date 20 Apr 2027. Management expects a close in late Q4 2026 or early 2027. Reading: Our estimate: about 26m new Tempus shares at today's price (about 14%), up to 36.4m below the floor. The base case loses about $2.56 a share if Personalis is worth $1.3bn rather than the price paid; the verdict is Avoid with or without it. | High | |
| xT tumor-only ADLT pricing FDA approved the tumor-only xT CDx in May; the unified ADLT rate is expected from January 2027. Management: about $85m a year, about $400m combined uplift in 2028 with xF. Reading: Still pending; confirmation of the rate is one of the triggers that would improve the case. | Medium | |
| Q3 2026 results Date announced by the company on 15 October. Reading: First read on oncology volume, MRD volume, data bookings and cash flow since the guidance raise. | Medium | |
| BMS and Pathos data agreements Form 8-K: $192.5m over about five years, $137.5m fixed from BMS through 2031 and up to $55m from Pathos at $100 per delivered neurology record plus $5m for updates. Pathos is a related party; independent directors approved its contracts. Reading: Our estimate: about $37m a year, about 1.9% of 2027 consensus revenue, consistent with the bookings pace already assumed. Supports the data moat; moves no score, level or verdict. | Medium | |
| Moderna and Merck collaboration Tempus handles sample logistics and sequencing for the design and manufacture of the individualised cancer vaccine intismeran autogene. Terms not disclosed. Reading: Positions Tempus in the vaccine supply chain if it is approved; reflected only in the bull case. | Medium |
Key Risks
| Risk | Probability | Severity | Comment |
|---|---|---|---|
| Valuation reversal | Medium-High | High | Shares trade above the base and weighted values; the bear case is near July's price. |
| Reimbursement | Medium | High | Much of the value case depends on ADLT rates from 2027 and coverage decisions. |
| Dilution | High | Medium | About 26m shares from Personalis at today's price, up to 36.4m below $48.42, plus stock pay and convertibles. |
| Short interest and volatility | High | Medium | Short interest about 29% of float at the mid-July reading; daily range about 8% of price. |
| Cash burn | Medium | Medium | H1 free cash flow -$102m; a cash election would use most of the cash pile. |
| Competition | Medium | Medium | Guardant, Natera and Foundation Medicine lead their categories. |
| Personalis close and integration | Low-Medium | Medium | Vote 30 Nov; antitrust clearance outstanding; MRD loses money per test today. |
| Related-party dealings | Medium | Low-Medium | Data contracts with Pathos depend on independent-committee oversight. |
Scenario Analysis
| Case | Probability | Fair Value | Outlook |
|---|---|---|---|
| Bull | 25% | $82.30 | 2027 revenue about $2.05bn: volume above 30%, ADLT rate in full from January, data bookings convert fast; Personalis worth the $1.76bn paid. 7.5x EV/sales. |
| Base | 47% | $60.02 | 2027 revenue about $1.97bn, in line with consensus; adjusted EBITDA keeps improving; Personalis worth $1.3bn. 6.0x EV/sales. |
| Bear | 28% | $35.82 | 2027 revenue about $1.85bn: growth slows, a pricing delay, MRD losses weigh; Personalis worth $0.9bn and the share ratio at its cap. 4.0x EV/sales. |
The Case
Tempus keeps executing, with 22% revenue growth, oncology volume up 31% and a new $192.5m data agreement with Bristol Myers Squibb and Pathos. The shares have fallen 20.5% since September, but the Personalis deal now looks set to add about 14% to the share count for a business that loses money per test, and the weighted fair value is $58.82, 13% below the price. The name becomes interesting at $49 to $51.
Archived Reports
Beating The Bull keeps every past version of this report on file. Verdicts and numbers reflect what was known when each one was published.
Informational use only. Not financial advice.