TEM vs. ILMN: Which MedTech Stock Offers Greater Upside?

In 2026, MedTech players' success will hinge on their ability to balance near-term pressure with long-term transformation. Per a report by ZS, these players must address immediate operational, financial, and regulatory challenges without losing sight of broader industry shifts. A key priority will be proactively adapting to the migration of care toward outpatient centers and ambulatory surgery settings, ensuring that products and services are tailored to these evolving care environments. MedTech firms will also need to take a strategic approach to surgical robotics — either integrating the technology to strengthen their competitive positioning or differentiating themselves in segments where robotics is not essential.

At the same time, these companies must take a pragmatic approach to artificial intelligence (AI), focusing on applications that genuinely enhance efficiency, decision-making and patient outcomes rather than adding AI features solely for marketing appeal. Market players need to actively plan for multiple future scenarios and be ready to pivot as conditions evolve. Companies that combine agility with a clear strategic direction will be best positioned to thrive in 2026.

MedTech players like Tempus AI TEM and Illumina ILMN are likely to be on investors’ radars in 2026. 

Stock Performance: TEM vs. ILMN

Shares of Tempus and ILMN have declined 9.1% and 7.1%, respectively, year to date.

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The Case for Tempus

Oncology remains the primary growth driver within Tempus’ diagnostics business. In 2026, Tempus launched Paige Predict, an AI-powered digital pathology suite that analyzes standard H&E slides to predict 123 biomarkers across 16 cancer types. 

In 2025, Tempus extended Tempus Next care pathway intelligence platform into breast cancer, furthering AI-driven decision support across oncology. The company introduced Tempus xM for treatment and response monitoring (TRM), a liquid biopsy assay designed to monitor immunotherapy response in patients with advanced solid tumors. Tempus also expanded its exclusive collaboration with Personalis to include colorectal cancer as the fourth indication under the NeXT Personal MRD commercial partnership.

Tempus’ fourth-quarter revenues increased 83.0% year over year to $367.2 million. The growth was driven by the Diagnostics and Data and Applications arms’ huge growth of 121.6% and 25.1%, respectively.

In the fourth quarter of 2025, Tempus delivered significant improvement in profitability metrics compared to prior periods. The company reported positive adjusted EBITDA of $12.9 million, reflecting operating leverage as revenues scaled and cost discipline improved. Gross profit increased 109.4% year over year, driven by higher oncology testing volumes, increased data and services revenues, and continued automation within its lab operations.

The quality of profitability remains a key consideration for Tempus. Despite achieving positive adjusted EBITDA, GAAP losses persisted, reflecting substantial stock-based compensation, higher amortization of acquired intangibles related to the Ambry transaction, and a one-time loss associated with debt extinguishment. Net loss was $54.2 million, which included $48.7 million of stock compensation expense and related employer payroll taxes in the fourth quarter.

The Case for Illumina

An expanding NGS oncology portfolio is helping Illumina drive the revolution in cancer genomics. In 2025, Illumina introduced TSO 500 v2, the next-generation version that offers a streamlined sample-to-analysis workflow. 

Illumina is partnering with several global pharmaceutical companies to develop companion diagnostics (CDx) enabled on the TSO Comprehensive genomic profiling test, focusing on KRAS alterations, which are known to cause uncontrolled cell growth, leading to cancer. The company introduced DRAGEN v4.4 with ready-to-use oncology applications for clinical research and obtained regulatory clearance in Japan.

Revenues of $1.16 billion were up 5% year over year. The figure was also surpassed the company’s expectations, driven by robust clinical consumable revenues, better-than-expected NovaSeq X placements, and outperformance in China. 

In the fourth quarter of 2025, Illumina reported improved profitability metrics, supported by cost-reduction actions and stabilizing demand in clinical sequencing markets. Adjusted operating margin expanded 64 bps to 63.7% in the quarter. 

In recent years, Illumina’s operations have been impacted by macroeconomic headwinds, including inflation, currency fluctuations and concerns about a potential economic slowdown. In the fourth quarter of 2025, non-GAAP gross margin declined 40 basis points year over year to 67%, primarily reflecting a 205-basis-point impact from tariffs.

Valuation: TEM vs. ILMN

Tempus is trading at a forward 12-month price-to-sales (P/S) ratio of 5.92, below its median of 7.81 over the past year. Illumina’s forward 12-month P/S ratio of 4.08 is higher than its median of 3.53. However, ILMN is trading cheaper than TEM.

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Price Targets for TEM and ILMN

Based on short-term price targets by 14 analysts, the average price target for Tempus is $86.71, implying a 49.6% upside from the latest closing price.

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Based on short-term price targets by 19 analysts, Illumina’s average target of $133.74 implies an 8.8% upside from the most recent close.

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Conclusion

Both Tempus and Illumina presently carry a Zacks Rank #3 (Hold). Overall, Tempus’ accelerating oncology innovation, expanding AI-powered diagnostics portfolio, and strong growth across its Diagnostics and Data and Applications segments reinforce its position as a leader in precision medicine. Illumina’s expanding NGS oncology portfolio, companion diagnostic partnerships and software advancements strengthen its central role in enabling cancer genomics globally.

Both companies demonstrated improved profitability in the fourth quarter, though Illumina operates from a more mature, cash-generative base, while Tempus is transitioning from growth-stage investment toward scaled profitability.

Based on 12-month price performance and valuation metrics, Illumina appears to be the stronger investment option at this time compared with Tempus. 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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