Tempus AI stock downgraded by William Blair after massive rally

Investing.com -- William Blair downgraded Tempus AI Inc (NASDAQ: TEM) to "Market Perform" from "Outperform" given stock's sharp rally rather than any concerns over the company’s fundamentals. Tempus shares have surged 111% year-to-date, fuelled in part by investor enthusiasm despite a slight fourth-quarter revenue miss.

The rally was also linked to market momentum following Nancy Pelosi’s purchase of Tempus call options and the Trump administration’s AI investment under the Stargate initiative, though the firm noted these events are unlikely to impact the company’s financials.

William Blair’s valuation analysis, using comparable company metrics, discounted cash flow, and sum-of-the-parts methodologies, suggests a fair value of about $65 per share, close to the current trading price of $71.21. The firm does not foresee significant upside beyond consensus expectations or the company's post-Ambry Genetics acquisition guidance, which projects over 75% revenue growth in 2025 and full-year adjusted EBITDA profitability.

While noting strong business fundamentals, William Blair maintained that traditional valuation metrics warranted a more neutral stance on the stock at current levels.

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