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On Thursday, KeyBanc Capital Markets adjusted its outlook on The Trade Desk (NASDAQ:TTD), a leading technology company in the advertising sector with a market capitalization of over $60 billion and impressive gross profit margins of 81%. Analyst Justin Patterson reduced the price target to $130 from the previous $142 while sustaining an Overweight rating on the shares.
The revision follows The Trade Desk’s recent earnings report, which marked the company’s first shortfall since the onset of the pandemic. Patterson noted that The Trade Desk might temporarily fall out of favor with investors as they evaluate whether the earnings miss stemmed from internal execution challenges or from competitive pressures within the industry. According to InvestingPro data, the stock currently trades at an EV/EBITDA multiple of 131.6x, suggesting rich valuation levels.
Despite the lowered price target, Patterson remains optimistic about the company’s prospects, citing significant opportunities in connected TV (CTV), retail media, and audio. The analyst anticipates that if The Trade Desk effectively capitalizes on these opportunities, it could return to a growth rate exceeding 20% by the year 2026, especially as partnerships with Netflix (NASDAQ:NFLX) and Spotify (NYSE:SPOT) expand. This optimism is supported by The Trade Desk’s current revenue growth of 26% and strong financial health score on InvestingPro, which offers 13 additional valuable insights about the company’s performance and prospects.
Moreover, Patterson highlighted potential upcoming catalysts for The Trade Desk, including the outcome of the anticipated trial between Google (NASDAQ:GOOGL) and the Department of Justice (DOJ). Such events could further influence the company’s trajectory, which investors can track through comprehensive analysis available in the Pro Research Report on InvestingPro.
In his analysis, Patterson applied a 44.5x multiple to the company’s projected 2026 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) to arrive at the new price target. The Overweight rating reflects KeyBanc’s positive stance on The Trade Desk’s stock despite the recent earnings miss and subsequent adjustment of the price target.
In other recent news, The Trade Desk has been the focus of several analyst firms following a shortfall in its fourth-quarter earnings, marking its first non-pandemic revenue miss since going public. Raymond (NSE:RYMD) James maintained a Market Perform rating for The Trade Desk, attributing the revenue miss to internal changes and a strategic shift in resource allocation. Meanwhile, JMP Securities, RBC Capital Markets, Jefferies, and Cantor Fitzgerald all revised their price targets for the company, with JMP Securities and RBC maintaining an optimistic outlook despite the earnings miss.
JMP Securities reduced its price target for The Trade Desk from $150 to $115 but maintained a Market Outperform rating, seeing potential growth across various channels. RBC Capital Markets, on the other hand, cut its price target to $120 from $140, but kept an Outperform rating, citing strong strategic positioning despite the recent results.
Jefferies also adjusted its target price for The Trade Desk from $150 to $120, maintaining a Buy rating. The firm attributed the earnings miss to operational missteps but expressed confidence in the company’s long-term prospects. Lastly, Cantor Fitzgerald cut its price target for The Trade Desk to $100 from $115, keeping a Neutral rating on the shares. The firm noted the disappointing fourth-quarter performance but also highlighted the company’s focus on growth initiatives with considerable long-term potential.
These recent developments indicate that while The Trade Desk faces some challenges, analysts are viewing the issues as temporary and manageable, with the company’s strategic positioning and growth potential remaining strong.
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