Key Takeaways:
Tempus AI shares surged 39.5% to $66.65 after Merck and Moderna's Phase 3 cancer vaccine trial hit endpoints, confirming the $1.5 billion Personalis acquisition.
Tempus AI CEO Eric Lefkofsky called the second quarter "another exceptional quarter for us" as the company posted revenue of $382.5 million, up 22 percent year over year, and its first GAAP profit as a public company.
The stock's two-session gain added roughly $3.03 billion to Tempus AI's market capitalization, nearly double the $1.5 billion enterprise value of the Personalis deal. Shares rose 24.1 percent on Wednesday and 8.8 percent on Thursday, closing at $66.65 with a market cap of approximately $11.69 billion. The S&P 500 declined 1.9 percent and the Nasdaq Composite fell 2.8 percent over the same period.
The rally prices in more than just the acquisition. Tempus AI now trades at roughly 7.5 times management's projected 2026 revenue midpoint of $1.60 billion, above the $62.92 average analyst target. The deal is expected to close late this year or early 2027, pending shareholder and regulatory approvals.
Trial readout and the Personalis connection
Merck and Moderna published Phase 3 trial data on Wednesday showing that patients who received their jointly developed mRNA cancer vaccine alongside Merck's Keytruda immunotherapy saw significantly reduced cancer recurrence and spread compared with those who took Keytruda alone. The trial achieved both co-primary endpoints, though specific efficacy data have not yet been disclosed.
Personalis, which Tempus AI agreed to acquire in a stock-and-cash deal, developed the NeXT Platform for genomic tumor profiling that was central to the vaccine's development. Personalis reported second-quarter revenue of $22.4 million, up 30 percent year over year, with clinical revenue of $2.6 million, up 442 percent. Clinical test volume nearly tripled to 10,384 tests, and CEO Chris Hall said more than 1,400 doctors are now ordering NeXT Personal.
Analyst reaction and valuation
BTIG's Mark Massaro raised his price target to $80 from $70 on Thursday while maintaining a Buy rating. The 15-analyst consensus stands at 8 Buy, 7 Hold, and 0 Sell ratings, with an average target of $62.92 — 5.6 percent below Thursday's closing price.
Tempus AI's diagnostics segment, the larger of its two business units, grew revenue 20 percent year over year to $289.3 million in the second quarter. Oncology volume rose 31 percent, while minimal residual disease testing volume climbed to 9,000 cases from 6,500 in the prior quarter. The company forecasts approximately $1.60 billion in revenue for 2026.
The stock remains roughly 30 percent below its all-time high near $104 and down about 10 percent over the past year. Three insiders sold shares totaling more than $2.7 million under pre-arranged Rule 10b5-1 trading plans during the rally week, though the transactions were scheduled months in advance.
The next test for Tempus AI is execution: converting the clinical readout into sustained testing volume and integrating Personalis without disruption. Detailed Phase 3 efficacy data remain undisclosed, and the stock-funded deal carries price risk if Tempus shares fall below the $46 merger threshold. The transaction is expected to close late this year or early 2027.
This article is for informational purposes only and does not constitute investment advice.
