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The Trade Desk’s (NASDAQ:TTD) stock rose ~5% on Friday after BTIG upgraded the shares to Buy from Neutral with a $103 price target as the analysts see an improving fundamental setup which may lead to stronger results this year, and faster growth with margin improvement in future periods.
BTIG analysts noted that they started coverage of Trade Desk earlier this year with a favorable view of their position in the market, but were worried that consensus expectations for 2023 could be too aggressive in a recovering and otherwise low-visibility ad market.
However, since then, the analysts said that their view of the fundamental setup has reverse completely. Checks have suggests the programmatic market growing at a +20-25% pace per year, due to sustained shifts of advertising dollars toward lower funnel digital formats, and a higher proportion of that digital ad spend ex-search/social being automated.
The analysts added that, given that Trade Desk already has a strong foothold in the CTV and Retail Media segments of that programmatic market, and feedback indicate their platform is becoming an increasingly attractive alternative to DV360, they view room for the company to meet or surpass the high end of that market growth range.
In addition, the analysts noted that valuation is tricky with Trade Desk, and they chose to evaluate the business with a shorthand DCF, excluding the benefit of executive SBC packages. That system of evaluation, in the analysts’ view, gives them credit for the stickiness of client relationships, competitive advantages, and room to maintain healthy rates of growth through programmatic market expansion or additional down-market client base expansion (most likely helped by Kokai/AI).
More on The Trade Desk
- The Trade Desk Alert: Turning Cautious On This Top Pick After 98% YTD Gain
- The Trade Desk: A Long-Term Winner In Advertising
