On Wednesday, BMO Capital Markets maintained its Outperform rating on The Trade Desk (NASDAQ:TTD) shares and increased the price target to $160 from the previous $125. The revision reflects the firm's positive outlook on the company's performance, particularly in the connected TV (CTV) advertising sector.
According to InvestingPro data, The Trade Desk currently trades at $119.76, with analysts' targets ranging from $57 to $160, suggesting potential upside. The company's strong market position is reflected in its substantial market capitalization of $59.11 billion.
Analysts at BMO Capital cited expert checks that indicate a strong performance in fourth-quarter 2024 CTV advertising, which is expected to contribute to The Trade Desk's solid results. The company is believed to be capturing a significant portion of the incremental programmatic inventory from NFLX, outperforming competitors like DV360. This optimism is supported by the company's impressive revenue growth of 26.14% and robust gross profit margins of 81.06%, as revealed by InvestingPro analysis.
The Trade Desk is also anticipated to continue benefiting from the momentum in CTV and Retail Media, which supports a robust multi-year growth trajectory. BMO Capital's analysts are confident that The Trade Desk is well-positioned to take advantage of the over $150 billion projected shift from linear advertising to CTV. The company's overall financial health score is rated as GOOD by InvestingPro, with 8 analysts recently revising their earnings expectations upward for the upcoming period. Subscribers can access 14 additional ProTips and comprehensive valuation metrics through InvestingPro's detailed research reports.
In light of these factors, BMO Capital has raised its revenue forecasts for The Trade Desk, with a 0.6% increase for the fourth quarter of 2024 and a 1.1% increase for the full year 2025. The firm has also transitioned to a 10-year discounted cash flow (DCF) model from a 5-year model to better capture the long-term opportunities in CTV and Retail Media.
The analyst's statement underscores the expectation of ongoing momentum in these areas: "We believe TTD is garnering the lion's share of incremental long-tail NFLX programmatic inventory vs. DV360, and expect ongoing CTV/Retail Media momentum supporting robust multi-year growth. We think TTD remains best positioned on the demand side to benefit from $150B+ linear ad shifts to CTV. Raising 4Q24E/ FY25E revenue by 0.6%/1.1% and increasing target price to $160 from $125. Also shifting to a 10-year DCF (from 5 years) to better capture the CTV/Retail Media opportunities."
In other recent news, The Trade Desk, a leading player in advertising technology, has announced its acquisition of Sincera, a digital advertising data company. This move is aimed to enhance programmatic advertising capabilities and provide advertisers with integrated tools for a more transparent assessment of ad impressions and campaign investments. The Trade Desk has shown strong revenue growth of 26% over the past year and maintains impressive gross profit margins of 81%.
In analyst updates, Truist Securities has maintained a Buy rating on The Trade Desk's stock and raised its growth outlook, reflecting an optimistic view of the company's long-term growth potential. Similarly, Baird has reiterated The Trade Desk as a 'Best Idea' and increased its price target. These updates reflect an extended duration of discounted cash flow analysis.
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