On Tuesday, BTIG updated its outlook on The Trade Desk (NASDAQ:TTD), raising the price target to $110 from the previous $98, while maintaining a Buy rating on the stock. The firm's checks for the second quarter of 2024 indicated a positive trend, with expectations for digital advertising to improve throughout the year, bolstered by political and Olympics-related spending. This spending is anticipated to support mid to high single-digit underlying growth excluding inflation.
The analyst noted that while the second quarter's performance may have fallen slightly short of early expectations, the overall sentiment for The Trade Desk remains positive. The potential for high-20s percentage growth in total revenue is seen, which aligns with current investor expectations. However, the company's guidance, which tends to be conservative, could become a determining factor for performance.
The Trade Desk's narrative is gaining favor as concerns over a significant slowdown in growth next year have been mitigated. The shift in performance mix is expected to reduce cyclicality, and the ongoing transition of budgets from linear to Connected TV (CTV) could result in steady or even accelerating growth for The Trade Desk as the supply base widens.
Access to inventory from major players like Netflix (NASDAQ:NFLX) and Disney, although not currently rated by BTIG, could potentially add between $1 billion to $3 billion in gross spend and $250 million to $550 million in revenue in a best-case scenario. These contributions may start to affect the next year's results, with The Trade Desk set to gain market share over the coming years despite Amazon (NASDAQ:AMZN)'s rapid expansion in the same space.
The Trade Desk is poised to consolidate a significant position in the digital advertising market, which is expected to coalesce around a few major platforms with key first-party inventory. The revised price target of $110 reflects a more optimistic view of the medium-term opportunities for the company.
In other recent news, The Trade Desk has been the focus of several analyst adjustments following a strong financial performance and strategic partnerships. Truist Securities maintained a bullish stance on The Trade Desk, anticipating second-quarter earnings to surpass management's guidance, driven by robust performance in Connected TV (CTV) and Retail Media. Wells Fargo (NYSE:WFC) also maintained an Overweight rating, citing the company's upcoming integration with Netflix as a positive development.
Loop Capital increased its price target to $109 from $102, maintaining a Buy rating, after The Trade Desk reported strong quarterly earnings. BMO Capital Markets adjusted its price target to $108 from $107, reiterating an Outperform rating, highlighting potential growth from regulatory pressures on larger competitors.
Lastly, Piper Sandler raised its price target to $110 from $105, maintaining an Overweight rating, based on the company's consistent performance, especially in the Connected TV sector. These recent developments underline the confidence of several financial firms in The Trade Desk's strategic market positioning and growth trajectory.
InvestingPro Insights
As The Trade Desk (NASDAQ:TTD) continues to make waves in the digital advertising space, recent data from InvestingPro provides additional insights into the company's financial health and market position. With a robust market capitalization of $49.25 billion, The Trade Desk showcases a striking gross profit margin of 81.29% over the last twelve months as of Q1 2024, underlining its efficiency in monetizing its services. The company’s revenue growth remains robust at 24.88% over the same period, indicating a strong expansion in its business operations.
An InvestingPro Tip highlights that The Trade Desk holds more cash than debt on its balance sheet, suggesting a stable financial position that could support continued growth and investment. Moreover, analysts predict that the company will be profitable this year, with a net income expected to grow, reflecting a positive outlook for the company's earnings potential.
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