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TD Cowen Reinstates Buy Rating for Tempus AI, Raises Price Target to $74

NEW YORK – TD Cowen on Wednesday reinstated coverage of Tempus AI with a Buy rating and a price target of $74, up from its previous target of $58.

In a note to investors, TD Cowen analyst Dan Brennan highlighted the company's recently closed $600 million acquisition of Ambry Genetics, noting that it would speed up Tempus's path to profitability, give it access to Ambry's germline testing business, and provide opportunities to expand into new products and new synergies.

Brennan noted as a potential downside that Ambry's projected long-term revenue growth rate of around 20 percent annually is likely dilutive to Tempus' standalone rate.

He added that in 2024, Ambry had outpaced this projection, growing revenues by mid-20 percent year over year, with "share capture and stronger price realization as a result of" Invitae's bankruptcy contributing to this strength.

The bank had suspended its rating and price target for Tempus during the execution of the Ambry deal due to TD Securities' involvement in it.

Brennan said the bank remains positive on Tempus' business independent of the Ambry buy, citing its combination of its "unique AI-driven, attractive margin data business" and its cancer genomics testing segment.