Thursday, December 3, 2020

Trade Desk Shares Soared 26.58 Percent After Analysts Raised Forecast

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Trade Desk Inc.’s (Nasdaq: TTD) shares jumped 26.58 percent on Friday bringing its price to $819.34 at ring of the bell on the day. The provider of advertising instruments and marketing campaign planning reported impressive third-quarter results on Thursday Nov. 5 beating the analysts’ expectations. The Wall Street analysts this week, also came raising their ratings for the shares of the firm.

The quarterly revenue from Trade Desk grew 32 percent year-on-year to $216 million. Earnings were $1.27 per share. Both figures were higher than the forecast by Wall Street analysts. The company has almost restored its pre-crisis growth level, as it showed similar growth in the fourth quarter of 2019.


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As in previous quarters, advertising on video streaming platforms was the fastest-growing segment of Trade Desk advertising, as in previous quarters, spending on such advertising rose year-on-year by 100 percent. Moreover, in the mobile video and audio segments, Trade Desk recorded a 70 percent increase in advertising. A traditionally high level of customer retention was also reported by the company which remained nearly 95%.

The fourth-quarter forecast is optimistic. Management is targeting $289 million in revenue, up about 34% year-on-year and well above analysts’ estimate of $256.06 million for the same. Adjusted EBITDA with an increase of 38 percent is expected to be at least $115 million.

Stifel confirmed its “hold” rating on Trade Desk shares and raised its forecast from $420 to $500 for its target price. According to analysts, the positive outlook is based on the expectation that the advertising market and Trade Desk revenues will recover quickly immediately after the COVID-19 pandemic has ended.

Oppenheimer analysts put the rating above the market and raised the target price from $530 to $610. Trade Desk is expected to be able to take a leading position in advertising, marketing and build a “high EBITDA margin” business model. The Unified ID 2.0 solution, an open-source platform that can replace traditional cookie applications, is one of the drivers of Trade Desk’s growth. This technology is gaining momentum among the platforms for advertising technology.

Even more optimistic is Wells Fargo analyst Brian Fitzgerald who raised the stock’s price target to $750 from $550 with 8.5% downside potential and reiterated a Buy rating in note to investors on Nov. 6.

 

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