Monday, Oppenheimer has increased the stock price target for The Trade Desk (NASDAQ:TTD) to $120 from the previous target of $105, while maintaining an Outperform rating on the stock.
The firm's analyst cites The Trade Desk as a standout growth narrative in the Internet and Media sector, driven by a shift in consumer behavior towards connected TV and ecommerce. This shift is further bolstered by the expansion of retail media and advancements in addressability and measurement through UID2.
The Trade Desk is expected to benefit from increased advertising spending forecasts for the fiscal year 2024 by leading agencies, which hints at potential revenue growth for the company. Oppenheimer's analysis projects that The Trade Desk's share of the advertising spend will rise to 11.7% in 2026, up from 7.8% in 2023.
Despite an anticipated decrease in long-term take-rates as linear TV advertising dollars move to Connected TV (CTV), the firm believes that The Trade Desk is well-positioned to maintain a compound annual growth rate (CAGR) of 17% in revenue from the estimated year 2024 through 2030.
The report from Oppenheimer includes a comprehensive examination of global advertising estimates by format, an assessment of the Total Addressable Market (TAM) for the open internet, a segment analysis of The Trade Desk, and a detailed take-rate analysis.
The revised price target of $120 reflects a 41 times multiple on the company's estimated 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA), compared to the 62 times multiple of SaaS industry peers.
In other recent news, The Trade Desk, a key player in the digital advertising sphere, has been the subject of several recent analyst upgrades. Wells Fargo maintained its Overweight rating and $115.00 price target, citing the company's strong second-half catalyst path, especially with the anticipated integration with Netflix (NASDAQ:NFLX).
Loop Capital increased its price target to $109 from $102, following a robust financial performance by the company. BMO Capital Markets raised its price target to $108 from $107, highlighting the company's potential for growth, particularly in light of regulatory pressures on larger competitors. Piper Sandler increased its price target to $110 from $105, acknowledging the company's consistent performance, particularly in the Connected TV (CTV) sector.
These upgrades come in the wake of The Trade Desk's strategic partnerships with industry giants such as Netflix, Disney+/Hulu, NBCUniversal, and Roku (NASDAQ:ROKU). These alliances have enhanced the company's leadership in the CTV space, with the global online ad market's potential projected to surpass $1 trillion by 2028. The company's partnerships also extend to major retailers like Walmart (NYSE:WMT) and Target, tapping into a $54 billion opportunity.
The company's earnings per share (EPS) projections for the fiscal year show a steady increase, with estimates for the upcoming years suggesting continued profitability. However, the actual market share that The Trade Desk will capture from advertising-based video on demand (AVOD) revenue remains uncertain. Despite potential risks, The Trade Desk's strategic positioning and recent developments indicate a promising outlook in the digital advertising landscape.
InvestingPro Insights
In light of Oppenheimer's optimistic outlook for The Trade Desk (NASDAQ:TTD), several metrics and InvestingPro Tips provide additional context to the company's financial landscape. The Trade Desk's market capitalization stands at a robust $48.66 billion, reflecting significant investor confidence.
With a high P/E ratio of 242.33, the company is trading at a premium, which may indicate expectations of strong future growth, as supported by a notable revenue growth of 24.88% over the last twelve months as of Q1 2024.
InvestingPro Tips suggest that The Trade Desk maintains an enviable position with more cash than debt on its balance sheet and impressive gross profit margins of 81.29%, which could be a testament to the company's efficient operations and strong pricing power. Moreover, the company's liquid assets exceed short-term obligations, providing financial flexibility and stability.
For readers seeking to delve deeper into The Trade Desk's financials and future prospects, there are currently 18 additional InvestingPro Tips available. These tips offer insights into aspects such as valuation multiples, profitability, and stock performance trends.
Interested investors can explore these tips and gain a more comprehensive understanding of the company's potential by visiting https://www.investing.com/pro/TTD. Moreover, for those considering an InvestingPro subscription, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a wealth of expert analysis and data-driven insights.
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