CFRA has raised the price target for The Trade Desk (NASDAQ:TTD) to $110 from the previous target of $100, while maintaining a Buy rating on the company's stock.
The revised price target is based on a forward price-to-earnings (P/E) ratio of 49 times the firm's 2026 earnings projection, which has been set at $2.25 per share.
The valuation is higher than that of The Trade Desk's peers but remains below the company's historical averages.
The Trade Desk reported a second-quarter earnings per share (EPS) of $0.39, surpassing the consensus estimate of $0.36 and the prior year's figure of $0.28. The company's sales saw a 26% increase, exceeding expectations.
The robust performance has been attributed to the company's growing influence in the connected TV (CTV) sector. Additionally, The Trade Desk's adjusted EBITDA margin improved to 41% from 39%, benefiting from economies of scale.
The firm also highlighted the strategic partnership between The Trade Desk and Netflix (NASDAQ:NFLX), which is expected to support the increasing supply in the CTV market.
The Trade Desk boasts a high customer retention rate of over 95%, which is viewed positively by analysts. With the digital advertising market remaining robust, The Trade Desk is projected to grow at an annualized rate of over 20% through 2026.
The Trade Desk's potential for growth includes expanding its international market presence, which currently accounts for 12% of its sales, leveraging opportunities in retail media, increasing interest in its artificial intelligence platform Kokai, and the continued adoption of UID2,
The Trade Desk's alternative to traditional cookies. Despite Alphabet (NASDAQ:GOOGL)'s decision to continue supporting cookies, The Trade Desk's UID2 is still anticipated to gain traction. The company's net cash position stands strong at $1.5 billion.
The company has projected a minimum revenue of $618 million for Q3, with an expected adjusted EBITDA of around $248 million. Despite challenges posed by economic uncertainty and browser compatibility issues with UID2, The Trade Desk maintains a positive outlook, backed by strategic partnerships in CTV and Retail Media, and a robust financial standing with $1.5 billion in cash and no debt.
InvestingPro Insights
Following CFRA's optimistic outlook on The Trade Desk (NASDAQ:TTD), it's noteworthy to consider the company's financial health and market performance as reflected by recent data. The Trade Desk's market capitalization stands at a robust $47.24 billion, affirming its substantial presence in the digital advertising arena. Its impressive gross profit margin, reaching over 81% in the last twelve months as of Q1 2024, underscores the company's efficiency and the high value of its services.
InvestingPro Tips highlight that The Trade Desk holds more cash than debt on its balance sheet, providing financial stability and flexibility. Furthermore, analysts predict the company will be profitable this year, which aligns with its strong track record of net income growth. While the company is trading at a high earnings multiple, with a P/E ratio of 185.5 and an adjusted P/E ratio of 234.97 for the last twelve months as of Q1 2024, this is indicative of investor confidence in its future growth prospects. For those interested in further insights, there are 15 additional InvestingPro Tips available on The Trade Desk's profile.
Despite recent volatility, with the stock experiencing a 13.05% drop over the last month, The Trade Desk's long-term performance has been robust, with a 9.07% return over the past year. This volatility may present an opportunity for investors who are bullish on the company's strategic initiatives and market position. The Trade Desk's next earnings date is set for November 7, 2024, which will be a pivotal moment for investors to assess the company's ongoing performance and future outlook.
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