Research firm UBS initiated coverage on advertising platform The Trade Desk Inc (NASDAQ:TTD) with a Buy rating and a price target of $100. The price target implies upside of 33% from yesterday’s closing price.
The analysts said they see more ad budget migrations to Connected TVs in the U.S. and a strong rate of Connected TV expansion internationally. They also expect media partnerships to expand and contributions from the 2024 presidential election cycle.
Over the next three years, UBS expects a revenue compound annual growth rate of 26%.
The analysts explained, “Our above consensus '24/'25E YoY revenue growth est of 29%/25% (consensus 24%/23%), is supported by: 1) our expectations for a more accelerated cadence of linear ad budget migrations to Connected TV "CTV" in the U.S., 2) the rate of DIS+ & other CTV players expanding internationally, 3) TTD's retail media partnerships scaling outside of WMT, and 4) contributions from the '24 US Presidential election cycle.”
Discussing expected growth rates, they said, “We are looking for 3-Yr gross spend CAGR of 28% vs Street's 27%, coming from CTV contributing 17ppts, retail media 5ppts, China 1 ppt and other channels (non-retail media digital, audio, non-CTV video) 5ppts. On a revenue basis, this translates into 3-Yr revenue CAGR of 26% vs Street at 23%.”
Shares of The Trade Desk climbed 4% following the upgrade. The stock is higher by 70% year-to-date.