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On Wednesday, KeyBanc Capital Markets adjusted its financial outlook for The Trade Desk (NASDAQ:TTD), a leading provider of technology for advertising buyers. Analyst Justin Patterson at KeyBanc reduced the price target on the company's shares to $67.00 from the previous $74.00. Despite the lower price target, the firm maintained its Overweight rating on the stock. The timing is notable as InvestingPro data shows the stock trading near its 52-week low, with significant price declines over the past three and six months. The stock's RSI indicates oversold territory, suggesting potential value for investors looking at technical indicators.
Patterson cited several factors influencing the decision to revise the price target, including current macroeconomic conditions that are expected to lead to softer guidance for the second quarter. Additionally, the upcoming May Upfronts—an event where advertisers can buy television commercial airtime several months before the television season begins—pose potential risks for The Trade Desk. There is speculation that Amazon (NASDAQ:AMZN)'s demand-side platform (DSP) could secure new connected TV (CTV) partners during the event, which would impact The Trade Desk's market position. Despite these challenges, InvestingPro analysis reveals strong fundamentals: the company holds more cash than debt and maintains sufficient liquidity to cover short-term obligations.
The Trade Desk is also navigating negotiations with advertising agencies seeking more favorable rates. While Patterson believes that The Trade Desk will eventually resolve these challenges, he anticipates that the process will unfold over several quarters, rather than being resolved immediately after the first-quarter earnings are reported.
The revised price target of $67.00 is based on a 23 times multiple of the company's estimated 2026 enterprise value to EBITDA (earnings before interest, taxes, depreciation, and amortization), which represents a more conservative view of The Trade Desk's financial prospects for 2025 and 2026. The new price target reflects a lower forecast for EBITDA.
The Trade Desk's stock is currently trading significantly below its three-year median EV/EBITDA multiple of approximately 40 times. While a reversion to this historical multiple is not anticipated, Patterson suggests that a low- to mid-20 times EV/EBITDA multiple could be achievable for the company as it demonstrates improved execution and a return to growth rates in the high teens to 20 percent range. For deeper insights into The Trade Desk's valuation metrics and 20+ additional ProTips, including detailed Fair Value analysis and comprehensive financial health scores, visit InvestingPro.
In other recent news, The Trade Desk's financial outlook and competitive positioning have been the focus of several analyst reports. Wolfe Research has revised its price target for The Trade Desk to $60, maintaining an Outperform rating while anticipating that the company will slightly exceed revenue expectations for the first quarter. Jefferies also lowered its price target to $75 but kept a Buy rating, highlighting competition from Amazon and potential growth in connected TV (CTV) advertising as key factors. BofA Securities reiterated a Buy rating with a $130 price target, expressing confidence in The Trade Desk's ability to compete despite Amazon's presence in the digital advertising market.
CFRA upgraded The Trade Desk to a Buy rating with a $97 target, citing the stock's attractive valuation and potential growth drivers, such as the rise of CTV and international expansion. Meanwhile, Citi maintained its Buy rating and $70 price target, noting The Trade Desk's strong demand-side platform (DSP) and its resilience against Amazon's competitive efforts. Analysts have pointed out the importance of The Trade Desk's ongoing projects and its ability to capture more programmatic advertising budgets as the market evolves. These developments reflect varying perspectives on The Trade Desk's future performance amid shifting market dynamics.
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