Tempus AI Inc. is scheduled to release its third-quarter financial results before the market opens on Monday, marking a pivotal moment for the precision medicine company. Analysts project that Tempus will post its first quarterly profit since going public, a significant turnaround from the four-cent loss per share reported in the second quarter. Wall Street consensus estimates earnings of one cent per share, representing a 109% year-over-year improvement despite originating from a low base. While analysts maintain a Buy rating with an average price target of $75.06, this implies a modest downside from the current trading price of $77.84. Earnings per share estimates have declined by 5.21% over the past two months, though they saw a slight increase in the last week.
The anticipated profit comes as Tempus navigates a critical phase for its dual-platform business model, which combines diagnostics with data and software licensing. A primary focus for investors will be the sustainability of the company's data revenue stream. Goldman Sachs analyst Evie Koslosky, who initiated coverage with a Neutral rating this month, highlighted that the top five customers account for 59% of total revenue, with several key contracts facing renewal within the next one to two years. Koslosky flagged potential near-term risks stemming from diagnostic peers entering data monetization and Tempus's lack of exclusive rights to electronic health record data.
Conversely, momentum in pharmaceutical partnerships offers a counterpoint to these concerns. Tempus recently disclosed an expanded collaboration with Bristol Myers Squibb and a separate neurology deal with Pathos AI, which could generate up to $192.5 million in aggregate payments over approximately five years. Yi Chen of H.C. Wainwright noted that such larger commitments from established pharmaceutical partners bolster the commercial value of Tempus's data and analytical tools. Investors will also seek clarity on the pricing trajectory for diagnostics. Analyst commentary suggests that the recent FDA approval of the xT companion diagnostic assay could drive a roughly $200 average selling price uplift, contributing $85 million in annualized revenue starting in 2027. Furthermore, a potential approval of the xF liquid biopsy assay in the second half of 2027 might unlock an additional $400 million in incremental revenue by 2028.
In the previous quarter, Tempus reported a loss of four cents per share, which beat analyst forecasts of an eight-cent loss. Revenue for that period reached $382.5 million, reflecting a year-over-year increase of more than 50% driven by growth in both diagnostics volume and data licensing. Additionally, the company announced this month that its xR RNA sequencing assay received European Union certification, a regulatory milestone expected to support broader international adoption. The market will now determine whether the expected third-quarter profit represents a sustainable inflection point or a temporary milestone, a factor that will influence whether Tempus can justify its current valuation following a rise from its June 2024 IPO price near $37 to a 52-week high above $90 earlier this year.
Sources: Investing.com News.