Source Report | Stock Pitch: Tempus AI (TEM)

**Tempus AI trades at a forward EV/Revenue multiple of approximately 6.2x on 2026 revenue guidance of $1.59 billion, a discount to direct genomics peer Guardant Health's 12.7x TTM but aligned with the broader biotech/genomics sector median of 6.2x, because Tempus leverages its massive proprietary dataset (7+ million de-identified records) to auto-generate AI-driven insights for pharma partners like AstraZeneca, creating a flywheel where data volume directly fuels higher-margin Data & Services revenue (currently 25% of total, growing 31% YoY).[1][2][3]
- TTM revenue $1.27B (up 83% YoY), with Diagnostics (75% of mix) up 112% to $955M and Data/Services up 31% to $316M[1]
- Current EV $9.91B implies ~6.2x 2026 revenue; Finbox shows 8.8x forward today but compresses to 6.0x average over 5 years[4]
- Gross margins ~63% (gross profit $798M TTM), with Adjusted EBITDA guidance turning +$65M in 2026[5]

This positions Tempus for entrants seeking a data moat play: compete by partnering early on data licensing (e.g., Recursion-style deals) rather than building sequencing labs, but execution risk remains high if pharma R&D budgets tighten.

**Tempus AI's trailing P/S of 7.2x sits mid-pack versus peers like Veeva (10.6x, profitable SaaS leader) and Guardant (11.7x, blood-test focus), but premiums over software-like Schrodinger (3.7x) and hardware peers like 10x Genomics (4.0x) reflect Tempus' hybrid model—where AI matches patients to trials 3x faster via NLP on unstructured notes, driving 126% net revenue retention from existing pharma clients.[1][6][2][7][8]
- Market cap ~$9.3B; shares outstanding 174M at $52.26/share[1]
- Peers: RXRX ~20.8x-25x P/S (revenue ~$75M TTM, speculative AI-drug discovery); TXG 4.0x (revenue $643M)[9][8]
- Forward compression to ~5.8x P/S on $1.59B 2026 revenue guidance[10]

New competitors should target Veeva-like SaaS margins (target 80%+ gross) via AI analytics overlays, avoiding capex-heavy genomics; Tempus' P/B of 19x signals balance sheet strain from ongoing losses (-$245M net TTM), so focus on cash-efficient data plays.[1]

**Tempus AI's implied EV/Gross Profit multiple of ~12.4x (EV $9.91B / TTM gross profit $798M) mirrors high-growth diagnostics peers like Guardant while discounting pure software like Veeva, as its mechanism converts raw sequencing (low-margin) into AI-enriched datasets sold at 38% YoY growth in Insights licensing, with gross margins expanding from diagnostics scale (Q4 gross profit +95% YoY).[1][5]
- Gross profit $798M TTM (63% margin); peers: TXG ~$444M gross on $643M rev (69% margin, EV/GP ~5x); SDGR est. ~60-70% margins[8]
- No direct EV/GP consensus, but sector medians hover 10-15x for 50%+ growers (data estimated Q1 2026)[3]

For margin-focused entrants, justify premium via >70% gross margins early (emulate Veeva), as Tempus' current 63% leaves room for efficiency but risks commoditization in sequencing.

**Analysts price Tempus at consensus $78 (range $59-$100, Moderate Buy from 13-17 analysts), implying 49% upside from $52, with bull cases hinging on 25%+ 2026 revenue growth to $1.94B by 2027 and EBITDA positivity; bears cite persistent GAAP losses (-$0.06 EPS est. 2027) and high P/S premium if growth slows below 20%.[11][12][13]
- Recent: Morgan Stanley $70 (Overweight), Needham $75 (Buy from $100), Mizuho $100 (Outperform); 8 Buy/4 Hold/1 Sell[12]
- Bull: Data flywheel + partnerships (e.g., Pathos AI) drive 30%+ NRR; Bear: Dilution risk, execution on MRD reimbursement[14]

Compete by de-risking via narrow AI niches (e.g., imaging like Schrodinger); premium requires proving 40%+ CAGR and 10%+ EBITDA margins by 2028.

**Current valuation embeds ~25% CAGR to 2027 ($1.94B revenue) at 5x forward P/S with 4% EBITDA margins, a discount to Guardant/Veeva (8-12x) but premium to speculative AI-biotech (RXRX 20x+); to earn 10x EV/Rev premium, Tempus needs 35%+ growth via AI trial matching (126% NRR) and diagnostics doubling, while 15% growth risks 4x de-rating toward SDGR/TXG levels.[13][4]
- Implied: At $78 PT (~$13.5B mkt cap), ~8.5x 2026 rev / ~17x gross profit, assuming margin to 65%+
- Peers average ~7x EV/Rev (Veeva 8.3x, Guardant 12.7x, SDGR 2.6x, TXG 3.5x, RXRX ~15x est. on $75M rev)[9]

Entrants: Target 30%+ growth / 70% margins for parity; Tempus' data moat justifies slight premium if pharma deals accelerate, but high debt/equity (~2.5x est.) caps leverage. Confidence: High on metrics (Yahoo/Finbox verified Mar 2026), medium on forward growth (analyst est. range wide).

Recent Findings Supplement (March 2026)

Tempus AI's Q4 2025 Earnings Ignite Multiple Compression: Trading at 6.2x Forward EV/Revenue Despite 25% Growth Guide

Tempus AI (TEM) crushed Q4 2025 expectations with $367M revenue (83% YoY growth, 33.5% organic ex-Ambry acquisition), flipping to positive $13M adjusted EBITDA via diagnostics scale (oncology volumes +29%, ASPs to $1,640) and data licensing surge (Insights +70% YoY ex-prior warrant). This data flywheel—8M+ de-identified records powering AI models for pharma—drives $1.1B backlog and 126% NRR, but shares sold off on FY2026 guide of $1.59B revenue (25% growth) seen as deceleration from 83% FY2025. At ~$52/share (mkt cap $9.3B, EV $9.9B), TEM's TTM P/S 7.2x and EV/Rev 7.8x (GP ~$798M TTM) now discount to peers on growth-adjusted basis; forward EV/2026 rev ~6.2x bakes in margin leverage to $65M adj. EBITDA (4% margin).[1][2]
- FY2025 rev $1.3B (+83% YoY), diagnostics $956M (+112%), data/apps $316M (+31%)
- Q4 non-GAAP GP margin 66% (Diagnostics 62%, Data 75%); oncology ASP +$40 QoQ to $1,640, +$500 upside potential via FDA shifts/payer wins[2]
- Cash $760M; peers like Guardant (GH) trade 12.7x EV/TTM rev on $982M rev but slower ~30% guide[3]

Implication for Competitors/Entrants: TEM's data moat (exclusive hospital network + multimodal AI) justifies premium if 2026 data rev accelerates to 40% (as guided); new entrants need proprietary datasets to compete, as banks/generic AI can't replicate real-time oncology insights.

Analyst Targets Reflect Bull/Bear Split on Margin Ramp: Consensus $88 Implies 70% Upside, But Bears Flag Cash Burn

Post-Q4 (Feb 2026), 23 analysts rate Moderate Buy with $88 avg target (69% upside from $52), ranging $59 (Baird Outperform) to $100+ (Mizuho/Needham pre-cut); recent tweaks include MS $85→$70 (Overweight), Needham $100→$75 (Buy), BTIG $105→$90 (Buy). Bulls bank on 25%+ rev growth + data margins to 80% yielding $65M EBITDA (guide); bears (e.g., Rockflow $20-35 base) cite GAAP losses (-$245M FY2025), FCF burn, and dilution risk despite $760M cash.[4][5]
- Consensus: 8 Buy/4 Hold/1 Sell; avg $78-88 across MarketBeat/Chartmill/TIKR[4]
- Bull: 60% rev growth to $2B, 65% margins → $130/share; Bear: 35% growth, 60% margins → $40/share (AskTraders pre-earnings)[6]

Implication for Competitors/Entrants: Targets assume TEM captures 40% data growth via partnerships (e.g., AstraZeneca benchmarks met); peers like Recursion (RXRX, 15.6x EV/rev on $75M rev) must prove AI-drug hits to close valuation gap—TEM's diagnostics cashflow funds R&D moat.

TEM Discounts to Diagnostics Peers on Speed: 7.8x EV/Rev vs Guardant 12.7x, Veeva 8.3x Despite Triple-Digit FY2025 Growth

TEM's TTM EV/Rev 7.8x (P/S 7.2x) trails Guardant (12.7x EV/Rev, $982M rev) and Veeva (8.3x EV/Rev, $3.2B rev) despite 83% growth vs GH's 33%; Schrödinger (2.6x EV/Rev, $256M rev) lags on slower 23% growth. Mechanism: TEM blends high-volume diagnostics (62% margins) with 75% data margins, but acquisition integration (Ambry/Paige) caps near-term leverage vs pure-play GH.[1][3][7]
- GH: EV $12.5B / $982M rev =12.7x; Veeva: EV $25.6B / $3.2B=8.0x; SDGR: EV $0.65B / $256M=2.6x; RXRX: EV $1.2B / $75M~15x[8]
- TEM GP TTM $798M → EV/GP ~12.4x; peers: GH $633M (EV/GP 19.7x), Veeva $2.4B (10.6x)

Implication for Competitors/Entrants: To earn GH-like premium, TEM needs 2026 diagnostics ASP +$500 (mix/FDA) + data 40% growth; entrants face barrier matching TEM's 126% NRR without scale.

Forward Valuation Assumes 4% EBITDA Margin: 152x Implied, But Data Ramp Could Justify 10x+ EV/Rev Re-Rating

Consensus embeds ~$65M adj. EBITDA on $1.59B rev (guide, 4% margin) → ~152x EV/EBITDA; current 6.2x fwd EV/rev assumes steady 25% growth to profitability (2027+). Non-obvious: $1.1B backlog (growing >rev) + AI (e.g., foundation models w/AstraZeneca) could double data rev, lifting margins to 10%+ vs peers' 5-15%, supporting 10x fwd rev (like Veeva).[2]
- FY2026 rev guide $1.59B → fwd P/S ~5.9x, EV/Rev 6.2x (cash offsets debt)
- If data hits 40% (guided), EBITDA $100M+ → 99x, but scales to 20x peer avg on outperformance[9]

Implication for Competitors/Entrants: Premium requires proving data > diagnostics (75% vs 62% margins); Recursion/SDGR (high-burn AI) can't match without TEM-like clinical vol—focus on partnerships to build moat.

Recent Analyst Shifts Signal Caution Amid Volatility: Targets Cut But "Moderate Buy" Holds

Feb-Mar 2026: MS $85→$70, Needham $100→$75, Baird initiates $59 (all Buy/Outperform); H.C. Wainwright $89→$95. Consensus $78-88 (36-70% upside) vs Oct 2025 peaks $100+; bears cite dilution/execution, bulls backlog/AI.[4]
- 23 analysts: Mean $88 (+69%); dispersion high (bull $100+, bear $20-35)[10]

Implication for Competitors/Entrants: TEM's guide tempers hype, but beats validate premium potential—watch Q1 for data acceleration to force peer re-rating.