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On Friday, Benchmark analyst maintained a Hold rating on The Trade Desk stock (NASDAQ:TTD), following the company’s rebound from the previous quarter’s performance. The company, currently trading at a P/E ratio of 91x and showing strong financial health according to InvestingPro metrics, reported revenue and adjusted EBITDA surpassing expectations, with growth primarily driven by the adoption of Kokai. The company maintains impressive gross profit margins of 80% and generated $526.7 million in EBITDA over the last twelve months.
The Trade Desk’s management did not report any negative impact from macroeconomic factors on its business. Instead, they are keeping an eye on developments related to major consumer packaged goods (CPG) and automotive brands. Despite the positive performance and strong revenue growth of 25% year-over-year, Benchmark remains cautious, citing the stock’s current valuation and the potential for the company’s growth to align more closely with the broader industry average over the next few years. InvestingPro analysis reveals 16 additional key insights about TTD’s valuation and growth prospects.
According to Benchmark, The Trade Desk’s growth expectations for 2025 are not guaranteed, especially when considering the premium growth expected compared to 2024. While analysts forecast 16% revenue growth for FY2025, the analyst also pointed out the risk associated with The Trade Desk’s concentrated agency business, which sees the top three agencies accounting for over 30% of the company’s total gross billings for 2024. This concentration could present challenges as The Trade Desk shifts its focus towards a brand direct model. For deeper insights into TTD’s financial health and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
The Trade Desk’s recent performance indicates a recovery from the previous quarter’s reset, with a significant contribution from Kokai adoption. Management’s strategy does not seem to be influenced by macroeconomic weaknesses at this time, but they are monitoring certain industry sectors closely.
Benchmark’s stance on The Trade Desk remains unchanged, with a Hold rating primarily based on the stock’s valuation and the anticipated reversion to mean industry growth rates. The firm also highlights the potential macroeconomic pressures that could impact this dynamic, as well as the risks inherent in The Trade Desk’s reliance on a few major agencies for a significant portion of its billings.
In other recent news, The Trade Desk’s first-quarter earnings report for 2025 has caught the attention of several analysts, leading to adjustments in stock price targets. Cantor Fitzgerald increased its price target to $71, noting the company’s strong first-quarter performance, which exceeded revenue expectations by 7% and reported EBITDA of $208 million. Truist Securities raised its target to $100, citing a robust second-quarter forecast and improved sales execution. Piper Sandler adjusted its target to $65, acknowledging The Trade Desk’s strategic position in the connected TV space despite competitive pressures. KeyBanc Capital Markets increased its target to $80, highlighting the adoption of The Trade Desk’s Kokai technology and its role in delivering stronger returns on ad spend. UBS maintained its Buy rating with a steady target of $80, noting improved revenue growth estimates and the successful adoption of Kokai. These developments reflect a positive shift in The Trade Desk’s financial outlook, as it continues to navigate macroeconomic challenges and capitalize on growth opportunities in the digital advertising sector.
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