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Tempus AI vs. Butterfly: Which AI Health Tech Stock is the Better Buy?
ZACKS· 2025-05-26 20:01
Core Viewpoint - Tempus AI and Butterfly Network are two AI-driven healthcare companies that are transforming diagnostics through their innovative approaches, with Tempus focusing on precision oncology and Butterfly on point-of-care imaging [1] Company Performance - Tempus AI's shares have increased by 55.4% over the past year, while Butterfly Network's shares have surged by 114.8%, significantly outperforming the Medical Info Systems industry's gain of 13.6% and the S&P 500's rise of 10.8% [2] Tempus AI Highlights - Revenue Growth and Margin Expansion: Tempus AI reported a 75.4% year-over-year revenue increase in Q1 2025, with its data licensing segment growing by 58%, contributing to overall profitability [6][8] - Positive EBITDA Outlook: The company is on track to achieve adjusted EBITDA profitability in 2025, narrowing its adjusted EBITDA loss to $16.2 million from $43.9 million a year earlier, reflecting strong revenue growth and disciplined spending [7] - Strategic Partnerships and Contract Backlog: Tempus AI secured a $200 million deal with AstraZeneca and Pathos, alongside a remaining contract value of over $1 billion, ensuring predictable revenues and financial stability [8][9] Butterfly Network Highlights - Strong Financial Performance: Butterfly Network achieved 20% year-over-year revenue growth in Q1 2025, with gross margins rising to 63% and adjusted EBITDA loss narrowing to $9.1 million [10] - Diversified Product Portfolio: The company has expanded its offerings under CEO Joseph DeVivo, introducing multiple probes and the Butterfly Garden AI marketplace, which diversifies revenue streams [11] - International Growth: Despite challenges, Butterfly Network's international revenues grew by 9% year-over-year, supported by pricing gains and partnerships with over 800 NGOs [12] Valuation Comparison - Tempus AI has a forward price-to-sales (P/S) ratio of 7.90, while Butterfly Network's ratio is 5.00, indicating that Butterfly is attractively valued compared to the industry average of 5.51 [13] - Analysts suggest a 10.55% upside for Tempus AI based on price targets, while Butterfly Network's average target indicates a potential increase of 94.86% [14][16] Investment Recommendation - Butterfly Network is currently rated a Zacks Rank 2 (Buy), presenting a more compelling investment case compared to Tempus AI, which holds a Zacks Rank 3 (Hold), due to its improving financials and lower valuation [18]
Beyond Tempus AI: 2 Health IT Stocks Poised for Growth in 2025
ZACKS· 2025-04-10 20:00
Industry Overview - Healthcare IT spending is on the rise, with 75% of healthcare providers increasing investments in AI, cybersecurity, and other IT areas, transitioning from a pandemic response to a core aspect of next-generation healthcare driven by generative AI technologies [1][2] - The sector is projected to experience a compound annual growth rate (CAGR) of 15.4% from 2024 to 2031, making healthcare IT a highly attractive investment opportunity [2] Company Highlights - Tempus AI has seen its stock rise by 30% year-to-date, focusing on precision oncology and personalized care through its AI-based platform that integrates multi-modal data [7] - Butterfly Network is gaining traction with its Ultrasound-on-Chip technology and is expected to report 5.9% earnings growth alongside an 18.9% revenue increase in 2025, with a strong buy recommendation from brokers [12][13] - Health Catalyst provides data and analytics technology to improve healthcare outcomes, with expectations of 7.1% earnings growth and a 9.2% revenue increase in 2025, holding a "hold" rating from analysts [18][19] Digital Transformation - By 2025, 70% of healthcare leaders plan to invest in digital tools, with 60% aiming to upgrade core technologies like EMRs and ERP software, indicating a significant shift towards digital transformation in the industry [9] - Cybersecurity is a major focus, with 78% of executives prioritizing enhancements due to the increasing risk of cyber threats as digital adoption accelerates [10] Generative AI Impact - Over 40% of organizations report significant to moderate returns on investment from generative AI, while 37% are still evaluating its impact, suggesting many companies are in the early stages of implementation [11]