Wednesday, an analyst from KeyBanc increased the stock price target for The Trade Desk (NASDAQ:TTD) shares to $130 from the previous $115 while keeping an Overweight rating on the stock. The analyst expects the company's revenue to at least meet the projected $623 million, which is slightly above the consensus estimate of $620 million. Moreover, there is a belief that the fourth-quarter guidance might surpass both the analyst's and the Street's forecasts of $753 million and $750 million, respectively.
The Trade Desk, a prominent player in the advertising technology sector, is anticipated to experience a growth in revenue of over 20% through 2026. This growth is projected to be fueled by advancements in connected TV (CTV) and retail media. There is also the potential for accelerated growth due to regulatory changes that could reshape the advertising technology industry.
Despite the positive outlook, the KeyBanc analyst advised investors to temper their expectations regarding the impact of political advertising. It is expected to provide a modest tailwind of approximately 3 points, reflecting The Trade Desk's larger scale compared to the 2020 and 2022 election cycles.
The revised price target to $130 is based on a forward-looking valuation, specifically the 2026 estimated enterprise value to EBITDA (earnings before interest, taxes, depreciation, and amortization) multiple of 40.5x. This adjustment reflects the analyst's confidence in the company's long-term growth trajectory and its positioning within the evolving market landscape.
In other recent news, The Trade Desk has been the subject of multiple analyst upgrades and positive financial results. Jefferies anticipates that The Trade Desk's Q4 revenue guidance will exceed market expectations, with a projected 6% increase in revenue for fiscal year 2025.
HSBC and Truist Securities have raised their stock targets for the company, maintaining a Buy rating. Needham also maintained a Buy rating and increased its price target, reflecting a positive outlook on the company's new business ventures.
The Trade Desk's recent financial performance has been notable, with a 26% increase in Q2 sales and an improved adjusted EBITDA margin of 41%. The company has projected a Q3 revenue of $618 million and an expected adjusted EBITDA of around $248 million.
These developments come as the digital advertising market, where The Trade Desk is a dominant player, continues to grow. Streaming now accounts for 41.4% of total TV viewership in the U.S., indicating the increasing influence of digital advertising. The Trade Desk's growth trajectory is expected to be further supported by this trend.
InvestingPro Insights
The Trade Desk's strong market position and growth potential, as highlighted by KeyBanc's analysis, are further supported by real-time data from InvestingPro. The company's impressive revenue growth of 25.53% over the last twelve months aligns with the analyst's projection of over 20% growth through 2026. This robust performance is reflected in TTD's stock price, which is currently trading at 99.96% of its 52-week high, indicating strong investor confidence.
InvestingPro Tips reveal that The Trade Desk holds more cash than debt on its balance sheet, suggesting financial stability as it pursues growth opportunities in CTV and retail media. Moreover, the company boasts impressive gross profit margins, with the latest data showing a gross profit margin of 81.23% for the last twelve months. This high profitability could provide The Trade Desk with resources to invest in innovation and market expansion.
However, investors should note that TTD is trading at a high P/E ratio of 220.54, which may indicate that the stock is priced for significant future growth. This valuation metric aligns with the KeyBanc analyst's forward-looking approach in setting the new price target.
For those seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for The Trade Desk, providing deeper insights into the company's financial health and market position.
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