On Thursday, Benchmark analysts maintained a Sell rating on The Trade Desk (NASDAQ:TTD) stock, with a steady price target of $57.00, significantly below the current trading price of $83.87. Despite the company’s impressive 25.63% revenue growth over the last twelve months and robust gross margin of 80.69%, The Trade Desk’s fourth-quarter revenue did not meet expectations, which has been attributed to a slower rollout and adoption of its Kokai platform, alongside some challenges in sales execution. These issues prompted a realignment of the company’s engineering and brand/agency sales teams in December. According to InvestingPro, the company maintains strong fundamentals with 13 additional key insights available to subscribers.
According to Benchmark, The Trade Desk has adjusted its strategy by forming smaller engineering teams focused on developing minor product releases, which may lead to improved sales penetration across a potentially wider client base. The reorganization of the client-facing sales team was deemed essential for addressing the overlap between brand and agency representatives, which was believed to be causing inefficient service to certain clients, potentially affecting sales. Despite these challenges, InvestingPro data shows the company maintains a strong financial health score of 3.01 (rated as "GREAT"), with solid liquidity as evidenced by a current ratio of 1.86.
Benchmark also suggests that the sales team restructuring is part of a move towards a more aggressive brand direct sales strategy, as opposed to relying on agencies. This shift is expected to streamline operations and enhance direct interactions with brands.
The Trade Desk’s decision to recalibrate its engineering approach and sales team structure is a response to the obstacles faced in the last quarter. The company’s efforts to refine its sales approach and product release strategy are aimed at improving client service and expanding its market reach.
The analyst’s comments provide insight into the challenges The Trade Desk encountered with its Kokai platform and the subsequent steps taken to address these issues. The Trade Desk’s stock price target and rating reflect Benchmark’s current perspective on the company’s performance and market position following these strategic adjustments.
In other recent news, The Trade Desk has been the subject of multiple analyst revisions following its first earnings miss since going public. Stifel analysts lowered their price target for The Trade Desk to $122 while maintaining a Buy rating, citing organizational restructuring and a slower rollout of the company’s Kokai product as reasons for the shortfall. Despite this, they remain optimistic about the company’s future, particularly in the Connected TV sector.
Similarly, Truist Securities reduced their price target to $130, also maintaining a Buy rating. They attributed the earnings miss to operational challenges but expect revenue growth to recover by the end of the year. Cantor Fitzgerald, on the other hand, cut their stock target to $100 and maintained a Neutral rating, adopting a cautious stance following the earnings miss.
Wolfe Research also reduced their price target to $100, but continued to endorse the stock with an Outperform rating, citing consistent revenue growth and new partnerships as positive indicators. Finally, Piper Sandler cut their stock target to $110 but maintained an Overweight rating, viewing the recent dip in stock price as a potential entry point for investors. These are the latest developments for The Trade Desk.
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