Tempus AI stock is cheap as Murrey Math Lines points to more gains
Tempus AI stock price surged to a record high on Wednesday after the healthcare-focused artificial intelligence company announced a major breakthrough from the Food and Drug Administration (FDA). It jumped to a high of $91, which coincided with the highest point in February this year.
Why Tempus AI stock is soaring
Tempus AI is a niche technology company that applies artificial intelligence to precision medicine. Its platform, often dubbed as the ChatGPT of the healthcare sector, used large datasets to help doctors and researchers provide quality care.
Tempus AI’s main business segments are in areas like genomics, data and AI services, AI clinical tools, and imaging and pathology.
Its business has been in a strong growth path in the past few years, with its revenue jumping from $188 million in 2020 to $693 million last year. This trend will likely continue as the company disrupts the giant health industry.
Tempus AI stock price jumped after the company announced an FDA clearance of its updated Tempus Pixel, an AI-powered cardiac imaging machine. The update allows the generation of T1 and T2 inline maps.
Essentially, the product will enable healthcare facilities to view and generate advanced cardiac MR images. In a statement, a senior executive at the company said:
“With inline maps generated by Tempus Pixel, cardiologists and radiologists gain a comprehensive view of heart tissue, enabling deeper insights into cardiac health and helping them deliver more precise, personalized care to their patients.”
Growth is accelerating
The most recent results showed that Tempus AI’s business continued growing in the second quarter. It made $316 million in revenue, a 89% annual increase, making it one of the fastest growing companies.
Most of this revenue growth was from its genomics business, which grew by 115% to $248 million. In this segment, the business was driven by its oncology testing solutions. Data and services revenue rose by 35.7% to $72.8 million.
Read more: Tempus AI stock wasn’t worth owning even without the short report: find out why
Analysts are optimistic that Tempus AI has more growth trajectory ahead. The average estimate among analysts is that its revenue will be $328 million this quarter, representing an annualised growth of 81%. The most optimistic analyst sees its revenue hitting $332 million.
The annual revenue is expected to come in at $1.26 billion, up by 81% this year, followed by $1.56 billion in 2026.
The main challenge for Tempus AI is that its business is not chea, as the company has a market capitalization of over $15 billion. This likely explains why many people have taken a short position, with its short interest being 15%.
However, the rule of 40 metric shows that the company is not all that expensive. Taking its current net profit margin of minus 20% and the forward revenue of 80%, gives it a rule of 40 metric of 60%, which is much higher than the benchmark of 40%. Using the adjusted EBITDA figure, the company has a metric of 87%.
Tempus AI stock price technical analysis
The daily timeframe chart shows that the Tempus AI stock price has been in a strong uptrend after bottoming at $35.9 in April.
It has soared and is now hovering at its all-time high. Most recently, it moved above the important resistance level at $74.7, its highest level in June.
The stock remains above all moving averages, a sign that bulls are in control. Most importantly, it has moved above the strong pivot reverse point of the Murrey Math Lines tool.
Therefore, the rally will continue as bulls target the extreme overshoot of this tool at $112, which is about 28% above the current level.
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