Should You Buy, Hold or Sell TEM Stock Post Q3 Earnings Release?

Last week, Tempus AI Inc. TEM reported its third-quarter 2025 results. Both earnings and revenues beat their respective consensus estimate. 

Tempus, a technology company leading the adoption of artificial intelligence to advance precision medicine and patient care, reported a narrower-than-expected loss of $0.11 per share. Sales also surged 84.7% year over year to $252.9 million. For the first time, the company reported positive adjusted EBITDA — a landmark achievement after a decade of effort.

Rivals of Tempus are also demonstrating strong performance and strategic growth moves. 10x Genomics TXG reported a third-quarter loss of $0.22 per share, beating estimates by 18.5%, while revenue reached $149 million, exceeding expectations by 4.6%. 

Similarly, Doximity DOCS delivered adjusted EPS of $0.45 in the second quarter of fiscal 2026, surpassing estimates by 18.4%. Revenues of $168.5 million outperformed projections by 6.8%.

TEM Stock's Price Performance

During the third quarter, TEM stock climbed 35.7%, surpassing the 6.7% gain posted by the broader industry. The S&P 500 benchmark index gained 9.6% during this period. The company also outperformed other players in the health infotech field, including TXG, which declined 3.1%, and DOCS, which gained 25.3% during the same period.

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Let’s explore the company’s fundamentals to better understand how to play the stock after its latest results.

Strong Segmental Performance

In the third quarter, Genomics revenues rose 117.2% year over year to $252.9 million. Within this segment, Oncology testing (legacy Tempus clinical) generated $139.5 million, up 31.7%, driven by approximately 27% volume growth. Hereditary testing (legacy Ambry Genetics) contributed $102.6 million, up 32.8% on a pro-forma basis, supported by approximately 37% volume growth.

During the quarter, Tempus received U.S. FDA 510(k) clearance for its xR IVD to support life sciences drug development programs. The company also launched xM for Treatment Response Monitoring (“TRM”), a new liquid biopsy assay designed to track tumor fraction changes in patients undergoing immune-checkpoint inhibitor (ICI) therapy.

Looking ahead, Tempus plans to introduce its first whole-genome sequencing (WGS) test, Xh, next year to detect clinically relevant variants, particularly in hematologic oncology. With MRD reimbursement progressing and regulatory filing for the xF liquid biopsy expected later this year, additional growth tailwinds are anticipated. 

Moreover, Tempus is developing a companion diagnostic (CDx) with Verastem Oncology, following confirmatory testing in VSTM’s Phase 2 RAMP-201 trial, further strengthening its Genomics segment momentum.

In the third quarter of 2025, Data and Services revenues totaled $81.3 million, up 26.1% year over year, driven primarily by Insights (data licensing). Insights bookings reached $150 million across multiple new contracts, reflecting 37.6% year-over-year revenue growth, building on the multi-hundred-million-dollar foundation model deal signed earlier this year.

Tempus further strengthened its data and AI capabilities through the acquisition of Paige, an AI leader in digital pathology, enhancing its dataset, technical expertise, and footprint in this emerging field. The company also expanded its collaboration with Northwestern Medicine to integrate David, Tempus’ generative AI clinical co-pilot, into the EHR platform to streamline and transform clinical workflows.

Additionally, Tempus Next expanded into breast cancer, offering real-time insights to help clinicians close guideline-based care gaps, underscoring continued innovation across the Data and Services segment.

TEM’s EPS Growth

In the fourth quarter of 2025, Tempus is expected to experience 80% growth in revenues, with full-year 2025 growth expected to rise 81.8%. On the profitability front, earnings per share are expected to remain negative, but with an improvement of 72.2% year over year in fourth-quarter 2025 and 57% in 2025. Over the past 60 days, Tempus’ loss per share estimate for 2025 has remained unchanged at 68 cents. 

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Key Challenge for TEM

From a reimbursement standpoint, Tempus continues to see long-term tailwinds. The company ended the quarter with approximately 30% of xT CDx test volumes migrated to the FDA-approved or ADLT version and plans to transition most of the remaining volume throughout 2026. It also intends to submit its xF assay for FDA approval by year-end, followed by xR thereafter.

While the regulatory process will take time, management expects that the ADLT designation will provide meaningful pricing upside compared to current levels. For the third quarter, Tempus’ average reimbursement was approximately $1,600 per test, well below parity with peers. These ongoing regulatory and reimbursement efforts are expected to narrow that gap over time and strengthen the company’s financial position.

TEM Shares Look Overvalued

Tempus stock is not so cheap, as suggested by the Value Score of F.

TEM is currently trading at a 12-month forward price-to-sales (P/S) of 8.21X, which is higher than the industry average of 5.81X.

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Here’s How to Play Tempus Stock Now

Tempus enters a new stage of growth, marked by strong top-line growth, its first positive adjusted EBITDA, and continued innovation across genomics and AI-driven healthcare solutions. With its expanding portfolio of FDA-cleared offerings, strategic partnerships, and a growing data ecosystem, the company is well-positioned to scale its precision medicine platform and capture long-term value across oncology and broader clinical applications.

With TEM shares already trading at elevated levels, we advise those who already have this Zacks Rank #3 (Hold) stock in their portfolios to maintain their position, while others may wait for a more favorable entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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