On Monday, Loop Capital maintained a positive stance on The Trade Desk (NASDAQ:TTD) stock by keeping a Buy rating and increasing the price target to $145.00, up from the previous target of $120.00. This adjustment comes in the wake of The Trade Desk's robust third-quarter results and encouraging future projections.
The firm's analyst cited the company's strong performance in the third quarter as a key reason for the revised price target. The analyst believes that The Trade Desk's fourth-quarter guidance might have been conservative and expects that the company will continue to see momentum in its business operations and the market opportunities it is addressing.
Looking ahead, the analyst introduced projections for the year 2026, suggesting that while 2025 might see a slower growth phase in comparison to the presidential election year, 2026 is poised to benefit from The Trade Desk's expanded collaborations with major companies such as Netflix (NASDAQ:NFLX), Spotify (NYSE:SPOT), Disney (NYSE:DIS), Walmart (NYSE:WMT), and LG among others.
The Trade Desk's valuation was maintained using the same framework as before, with the price target increase to $145 reflecting a forward 45X EV/EBITDA multiple based on the 2026 estimates.
The analyst emphasized The Trade Desk's importance as critical infrastructure to media companies and noted the potential for growth through increased penetration of advertising budgets.
The analyst also mentioned that any potential regulatory actions addressing Google (NASDAQ:GOOGL)'s dominance in adtech could free up significant open web advertising spending, which would be a substantial benefit to The Trade Desk. The firm reiterated its Buy rating as The Trade Desk continues to command a premium in the market.
In other recent news, The Trade Desk has showcased a robust growth in the third quarter of 2024. The company reported a 27% increase in year-over-year revenue, reaching $628 million, largely driven by its Connected TV (CTV) advertising growth.
The adjusted EBITDA for the quarter was approximately $257 million, accounting for 41% of the revenue, and the free cash flow stood at $222 million.
The Trade Desk projects Q4 revenue of at least $756 million, indicating a 25% growth year-over-year, and an adjusted EBITDA of approximately $363 million.
BMO Capital Markets maintained an Outperform rating on The Trade Desk and raised the stock's price target to $125 from $108, following these developments.
The firm emphasized The Trade Desk's potential to capitalize on disruptions in Google's advertising technology business due to regulatory pressures.
Despite this, BMO Capital has removed The Trade Desk from its Top-SMID (Small to Mid) Pick list following a significant 84% year-to-date increase in the company's stock price.
InvestingPro Insights
The Trade Desk's strong market position, as highlighted in Loop Capital's analysis, is further supported by real-time data from InvestingPro. The company's impressive revenue growth of 26.14% over the last twelve months, coupled with a robust gross profit margin of 81.06%, underscores its financial strength and operational efficiency. These metrics align with Loop Capital's positive outlook on the company's future performance.
InvestingPro Tips reveal that The Trade Desk holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations, indicating a solid financial foundation. This financial stability positions the company well to capitalize on the expanded collaborations with major companies mentioned in the article.
It's worth noting that The Trade Desk is trading near its 52-week high, with a significant 95.49% price return over the past year. This aligns with the analyst's bullish stance and increased price target. However, investors should be aware that the stock is trading at high valuation multiples, including a P/E ratio of 201.79, which may reflect the market's high expectations for future growth.
For those interested in a deeper analysis, InvestingPro offers 19 additional tips for The Trade Desk, providing a comprehensive view of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.