On Friday, BMO Capital Markets maintained an Outperform rating on The Trade Desk (NASDAQ: NASDAQ:TTD) and increased the stock's price target to $125 from $108. This adjustment comes after The Trade Desk reported a steady performance in the third quarter of 2024, with revenue and adjusted EBITDA slightly surpassing Wall Street's expectations by 1.2% and 1.4%, respectively.
The Trade Desk's guidance for the fourth quarter of 2024 was below the high expectations set by the market, but BMO Capital Markets found reasons for optimism in the company's growth prospects. The firm highlighted The Trade Desk's commentary on the expansion of connected TV (CTV) and audio advertising as reinforcing confidence in the company's long-term opportunities.
According to BMO Capital Markets, The Trade Desk is well-positioned to capitalize on potential disruptions in Google (NASDAQ:GOOGL)'s advertising technology business due to regulatory pressures. This competitive edge has contributed to the firm's decision to raise its forward estimates for The Trade Desk.
Despite the positive outlook, BMO Capital has removed The Trade Desk from its Top-SMID (Small to Mid) Pick list. This decision follows a significant 84% year-to-date increase in the company's stock price. The report suggests that the full materialization of The Trade Desk's CTV ramp might take longer than initially anticipated.
Nonetheless, the firm reaffirms its Outperform rating and raises its price target, signaling continued confidence in The Trade Desk's market position and financial health.
In other recent news, The Trade Desk has reported a robust growth in Q3 2024, with a significant 27% year-over-year revenue increase to $628 million, largely propelled by its Connected TV (CTV) advertising growth. The company's adjusted EBITDA for the quarter was approximately $257 million, accounting for 41% of the revenue, and free cash flow was reported at $222 million. The Trade Desk projects Q4 revenue of at least $756 million, indicating a 25% growth year-over-year, and an adjusted EBITDA of approximately $363 million.
Operating expenses, excluding stock-based compensation, rose to $391 million, marking a 24% increase year-over-year. Despite this, the company ended Q3 with $1.7 billion in cash and no debt. International revenue growth outpaced that of North America for the seventh consecutive quarter.
InvestingPro Insights
The Trade Desk's strong market performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's stock has shown impressive returns, with a 50.14% price increase over the last three months and an 84.17% year-to-date return. This aligns with BMO Capital Markets' observation of the stock's significant 84% year-to-date increase.
InvestingPro Tips reveal that The Trade Desk holds more cash than debt on its balance sheet, indicating a strong financial position. This financial stability could be a key factor in the company's ability to capitalize on growth opportunities in CTV and audio advertising, as mentioned in the article.
The company's revenue growth of 25.53% in the last twelve months, coupled with its impressive gross profit margin of 81.23%, underscores The Trade Desk's solid financial performance. These metrics support BMO Capital Markets' decision to maintain an Outperform rating on the stock.
It's worth noting that InvestingPro offers 20 additional tips for The Trade Desk, providing investors with a comprehensive analysis of the company's financial health and market position. To gain access to these insights and more, consider exploring InvestingPro's full range of analytical tools.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.