On Thursday, Stifel analysts revised their price target for The Trade Desk (NASDAQ:TTD) shares, lowering it to $122 from the previous $144, while still holding a Buy rating on the stock. Currently trading at $83.30, the company maintains a strong market position with a $40.91 billion market capitalization. The Trade Desk, known for its digital advertising technology, experienced its first earnings miss since becoming a public entity, with the exception of the first quarter of 2020. According to InvestingPro analysis, the company maintains a GREAT financial health score, with more cash than debt on its balance sheet. This shortfall was attributed to organizational restructuring in December, which was more extensive than in previous years, and a slower release of Kokai, the company’s latest product iteration.
The restructuring process at The Trade Desk has now concluded, and Kokai is anticipated to reach all clients by the end of the year. Despite the earnings miss, Stifel’s outlook remains optimistic about the company’s future, particularly in the Connected TV (CTV) sector. This optimism is supported by the company’s strong performance, with revenue growing 25.63% in the last twelve months and maintaining an impressive 80.69% gross profit margin. InvestingPro subscribers can access 13 additional key insights about The Trade Desk’s growth potential and financial strength through the comprehensive Pro Research Report. Analysts from Stifel project a significant acceleration in the CTV space by 2026, potentially as early as the end of 2025. They expect a shift in inventory towards programmatic advertising, from the current 25% with roughly 6% real-time bidding (RTB), to more programmatic and away from direct deals, which is The Trade Desk’s area of expertise.
The Trade Desk’s after-hours trading reflected the market’s reaction to the earnings miss, yet Stifel’s analysts suggest that this presents a buying opportunity. While trading at a relatively high P/E ratio of 132.27, they believe that the recent hiccup does not alter the fundamental investment thesis for The Trade Desk. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be trading near its Fair Value, with analyst targets ranging from $57 to $160. The company is still seen as well-positioned to capitalize on the growing trend of programmatic advertising in the CTV domain.
The digital advertising market, particularly within CTV, is evolving as more inventory becomes available for programmatic buying, which is expected to benefit The Trade Desk in the long run. The company’s efforts to complete its organizational restructuring and roll out its latest product, Kokai, to all clients are steps towards maintaining its competitive edge in the market.
In summary, Stifel maintains a positive stance on The Trade Desk shares, despite the recent earnings miss and subsequent lowering of the price target. The firm’s analysts underscore the potential growth in the CTV sector and The Trade Desk’s strong position within it, recommending investors to consider the current weakness as an opportunity to invest.
In other recent news, The Trade Desk has been the subject of several analyst reports. Truist Securities reduced their price target for the company to $130, citing operational challenges such as slower deployment of the Kokai platform and staff turnover. Despite these issues, the analysts remain optimistic about The Trade Desk’s future, projecting revenue growth to increase to around 20% by the end of the year.
Cantor Fitzgerald also adjusted its price target for The Trade Desk, reducing it to $100. The firm maintained a cautious stance following the company’s fourth-quarter results, emphasizing the need for incremental confidence before changing its position on The Trade Desk’s stock. Wolfe Research analyst Shweta Khajuria reduced the price target for The Trade Desk to $100, endorsing the stock with an Outperform rating due to the company’s industry leadership and balance of growth and profitability.
Piper Sandler analyst Matt Farrell reduced the price target on The Trade Desk to $110, maintaining an Overweight rating on the company’s shares. Farrell pointed out two main reasons for the company’s performance shortfall: a comprehensive reorganization of the client-facing team and slower than anticipated adoption of its Kokai technology. Lastly, BMO Capital Markets adjusted its outlook on The Trade Desk shares, reducing the price target to $115. BMO Capital’s analyst Brian Pitz noted that The Trade Desk reported its first miss of internal expectations in 33 quarters, with fourth-quarter 2024 revenue and adjusted EBITDA falling short. Despite the lowered estimates and price target, Pitz remains optimistic about The Trade Desk’s long-term prospects.
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