On Monday, The Trade Desk (NASDAQ:TTD) shares received an upgrade in rating from New Street Research. The firm shifted its stance, moving from a "Reduce" to a "Neutral" rating. Alongside the rating change, the price target for The Trade Desk was increased to $115 from the previous $85.
The upgrade comes after a reassessment of the company's prospects following a political advertising season that concluded with lower spending than anticipated in 2024. New Street Research noted that the comparative growth metrics for 2025 now appear less daunting than previously estimated. This reassessment led to an upward revision in their financial estimates for The Trade Desk.
Further influencing the new outlook is the ongoing Department of Justice versus Google (NASDAQ:GOOGL) Ad Tech case. Recent industry discussions have led to a more favorable view of The Trade Desk's positioning relative to the case's developments. The firm believes that as the case progresses, The Trade Desk's valuation could benefit from its competitive standing in the industry.
In addition to the rating and target changes, New Street Research also highlighted The Trade Desk's strategic moves. Last week, the company announced the Ventura TV operating system, which New Street Research described as having a "unique and attractive positioning." This development is seen as a positive factor for the company's future growth and market position.
The Trade Desk, a prominent player in the digital advertising market, is adapting to the changing landscape, with its recent initiatives reflecting an effort to stay competitive and capitalize on new opportunities. The upgraded rating and increased price target by New Street Research reflect a more optimistic view of the company's trajectory in the near term.
In other recent news, The Trade Desk has been making significant strides in the advertising technology sector, with the introduction of a new streaming TV operating system, Ventura, set to launch in 2025. This innovation is expected to streamline the advertising supply chain and enhance viewer experience. The Trade Desk reported a 27% year-over-year revenue increase in the third quarter of 2024, reaching $628 million, primarily driven by growth in its Connected TV (CTV) advertising. The company anticipates fourth-quarter revenue of at least $756 million, suggesting a 25% year-over-year growth.
Several analyst firms have updated their outlook on The Trade Desk. Macquarie maintained an Outperform rating and increased the stock's price target to $150.00, reflecting the company's strong revenue generation. Jefferies reaffirmed its Buy rating with a steady price target of $138.00, while Evercore ISI and Loop Capital also maintained positive stances on the company, raising their price targets to $135 and $145 respectively. These adjustments are largely due to the company's robust third-quarter results and encouraging future projections.
InvestingPro Insights
The Trade Desk's recent upgrade by New Street Research aligns with several positive indicators highlighted by InvestingPro data. The company's revenue growth of 26.14% over the last twelve months, coupled with a robust gross profit margin of 81.06%, underscores its strong market position in the digital advertising space. These metrics support New Street Research's more optimistic outlook on the company's financial prospects.
InvestingPro Tips further reinforce The Trade Desk's solid financial footing. The company "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations," suggesting a stable financial position that could support its strategic initiatives, such as the recently announced Ventura TV operating system.
Additionally, the tip that "8 analysts have revised their earnings upwards for the upcoming period" aligns with New Street Research's upward revision of financial estimates. This collective optimism from analysts could be indicative of The Trade Desk's potential to capitalize on the evolving digital advertising landscape and its positioning relative to the ongoing DOJ versus Google Ad Tech case.
For investors seeking a deeper understanding of The Trade Desk's potential, InvestingPro offers 21 additional tips, providing a comprehensive view of the company's financial health and market position.
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