Jefferies lifts The Trade Desk stock price target to $82

On Friday, Jefferies analyst James Heaney increased the price target for The Trade Desk (NASDAQ:TTD) shares to $82 from the previous $68, while maintaining a "Buy" rating on the stock. The revision follows The Trade Desk’s reported revenue growth, which surpassed expectations. According to InvestingPro data, the stock currently trades at $59.90, with analyst targets ranging from $39 to $145, reflecting diverse market opinions about the company’s valuation.

The Trade Desk recently disclosed a 25% year-over-year revenue increase, significantly outperforming the guidance, which projected over 17% growth. This performance came amidst a period of high uncertainty, during which the company faced several challenges in the fourth quarter, including the rollout of Kokai and a reorganization. InvestingPro data shows the company maintains strong financial health with a current ratio of 1.81 and holds more cash than debt on its balance sheet, demonstrating resilience during this transitional period.

Management at The Trade Desk has downplayed concerns about competition from Amazon (NASDAQ:AMZN)’s demand-side platform, emphasizing that The Trade Desk primarily focuses on the Open Internet, contrasting Amazon’s emphasis on its proprietary inventory, such as Prime Video and Retail.

Based on the stronger-than-anticipated revenue for the first quarter and guidance for the second quarter, Jefferies has raised its revenue estimate for fiscal year 2025 by 2%, now expecting a 17% growth rate compared to the 26% growth in fiscal year 2024. Adjusted EBITDA estimates for FY25 have also been increased by 6%, with a forecasted adjusted EBITDA margin of 40%, slightly down from 41% in FY24. The company’s last twelve months EBITDA stands at $526.7 million, with a robust gross profit margin of 80.11%. Get access to 15+ additional key insights about TTD through InvestingPro’s comprehensive research reports.

The new price target of $82 is based on 27 times the firm’s estimated adjusted EBITDA for fiscal year 2026, versus the estimated 23% 5-year EBITDA compound annual growth rate. This adjustment reflects Jefferies’ confidence in The Trade Desk’s continued growth and ability to navigate market challenges effectively. The stock currently trades at an EV/EBITDA multiple of 52.85x, and according to InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels.

In other recent news, The Trade Desk has reported strong first-quarter earnings, surpassing analyst expectations with a 25% year-over-year revenue increase to approximately $616 million. The company’s adjusted EBITDA also exceeded forecasts, reaching about $208 million, which is 41% higher than anticipated. This robust performance has led several analysts to adjust their price targets for The Trade Desk. Morgan Stanley (NYSE:MS) raised its target from $60 to $80, while Citi increased its target to $82, and MoffettNathanson lifted theirs to $75, maintaining a Neutral rating. Stifel reiterated a Buy rating with an $87 target, emphasizing the company’s effective use of its Kokai platform and strong presence in the Connected TV (CTV) sector.

The Trade Desk’s management has provided a positive outlook for the second quarter, projecting a 17% year-over-year revenue growth despite some macroeconomic pressures. Analysts from William Blair and others noted that the company’s strategic upgrades and product initiatives, such as the Kokai platform, are driving efficiency and adoption. The Trade Desk’s leadership in the CTV advertising space remains a focal point, with analysts recognizing the company’s strategic positioning amid competitive pressures from entities like Amazon. Overall, analysts express confidence in The Trade Desk’s market leadership and its ability to navigate current challenges.

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