On Thursday, Loop Capital Markets adjusted their outlook on The Trade Desk (NASDAQ:TTD) shares, reducing the price target to $101 from the previous $145, while still maintaining a Buy rating on the stock. The revision follows what has been characterized as a disappointing earnings report from the company. According to InvestingPro data, the stock has declined nearly 35% year-to-date and is trading near its 52-week low of $76.12, with analysts maintaining price targets ranging from $56 to $155.
The Trade Desk, which has experienced a tenfold increase in stock price over the past 5-6 years, encountered its first earnings miss since its initial public offering. This development has led to significant investor concern and a notable revaluation of the stock. Analysts at Loop Capital have suggested that this revaluation might present the best buying opportunity for investors in a decade, provided that the company’s management can successfully navigate through current challenges. InvestingPro analysis shows the company maintains strong financial health with more cash than debt and a solid current ratio of 1.86. Get access to 15+ additional ProTips and comprehensive analysis with an InvestingPro subscription.
According to Loop Capital, the reasons for the earnings miss include a slower uptake of a new product, a decision which was partially intentional, and a greater than anticipated impact from a sales reorganization. Despite these setbacks, analysts believe that the company’s long-standing secular growth narrative remains intact. They argue that if the management’s explanations hold true and there are no other underlying issues, then the stock is poised to recover and potentially outperform in the future.
Loop Capital has expressed confidence in the management’s track record and suggests that long-term growth investors should consider the current dip in The Trade Desk’s valuation as an opportunity. They anticipate that the stock may experience volatility until the first-quarter results are released, which is expected around May 7th. However, they remain optimistic that if the company can return to its previous pattern of consistent performance beats and raised forecasts, the stock will likely rebound from its current position. With a market cap of $37.9 billion and revenue growth of 25.6% in the last twelve months, the company continues to show strong fundamentals despite its current P/E ratio of 97x. Dive deeper into The Trade Desk’s valuation metrics and growth potential with a InvestingPro subscription, which includes exclusive Fair Value analysis and a comprehensive Pro Research Report.
In other recent news, The Trade Desk reported fourth-quarter revenues of $741 million, marking a 22.3% year-over-year increase, though this fell short of the company’s guidance of "at least $756 million" and consensus expectations of $759 million. The company’s EBITDA for the quarter was $350 million, missing the guidance of "at least $363 million." Following these results, several analyst firms adjusted their outlooks on The Trade Desk. DA Davidson maintained a Buy rating but lowered the price target from $134 to $103, citing the recent earnings miss.
Stifel also maintained a Buy rating while reducing its price target to $122 from $144, attributing the shortfall to extensive organizational restructuring and a slower rollout of the Kokai platform. Truist Securities lowered its price target to $130 from $155, yet remained optimistic about The Trade Desk’s long-term growth potential. Meanwhile, Benchmark maintained a Sell rating with a price target of $57, pointing to challenges in sales execution and the need for strategic adjustments.
Cantor Fitzgerald cut its price target to $100 from $115, maintaining a Neutral rating and expressing a cautious outlook due to the earnings miss. The Trade Desk’s recent financial performance has prompted a range of analyst reactions, reflecting varied perspectives on its future prospects amidst ongoing strategic adjustments.
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