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On Friday, MoffettNathanson increased the price target for The Trade Desk (NASDAQ:TTD) shares to $75 from the previous target of $60, while keeping a Neutral rating on the stock. The adjustment follows a detailed analysis of The Trade Desk’s financial forecasts and market challenges. According to InvestingPro data, analyst targets for TTD range from $39 to $145, with 5 analysts recently revising their earnings expectations downward. The stock currently trades at a P/E ratio of 75.5x, reflecting high growth expectations despite recent market volatility.
MoffettNathanson’s current 2025 revenue projection for The Trade Desk stands at $2.87 billion, which is 4% lower than the pre-Q4 2024 estimate of $2.99 billion. The firm pointed out that while this variance is not substantial, the stock’s previous valuation at $120 per share made it vulnerable to significant downside risks from any revenue shortfalls. Additionally, the firm’s 2025 forecast for The Trade Desk’s GAAP EBITDA is nearly 25% below the pre-Q4 2024 estimate, indicating concerns about the company’s future operating leverage. The company maintains strong fundamentals with an "GREAT" Financial Health score from InvestingPro, supported by a solid 80.1% gross profit margin and robust revenue growth of 25.1% over the last twelve months.
The Trade Desk’s GAAP EBITDA operating leverage for the current quarter was reported at 23%, a stark decrease from the 52% in Q1 of the previous year and 47% for the entirety of 2024. Despite robust top-line growth, the company’s profitability has not kept pace with last year’s rates. MoffettNathanson noted that The Trade Desk is actively investing in talent and products, which is expected to impact this year’s financial results. The company maintains a strong balance sheet with more cash than debt, and its current ratio of 1.81 indicates healthy liquidity to support these investments.
During the earnings call, analysts raised questions about Amazon (NASDAQ:AMZN)’s potential threat to The Trade Desk’s dominant position in the Connected TV (CTV) advertising space. The Trade Desk confidently addressed these concerns, dismissing Amazon as a direct competitor for the time being due to its limited access to quality third-party streaming inventory and its current role as a conflicted walled garden reseller.
MoffettNathanson acknowledged the strength of The Trade Desk’s recent results and its formidable market positioning. However, the firm also expressed ongoing concerns about the fluidity of the CTV advertising market and the possibility of new competition, which has not been entirely ruled out in their analysis.
In other recent news, The Trade Desk reported a significant 25% year-over-year increase in revenue for the first quarter of 2025, reaching $616 million, which exceeded analyst expectations by 7%. The company’s earnings per share also surpassed projections, coming in at $0.33 compared to the anticipated $0.25. The Trade Desk’s guidance for the second quarter projects revenue of $682 million and an EBITDA of $259 million, slightly above consensus estimates. The company’s core product, Kokai, has seen adoption rates surpass expectations, contributing to a 42% reduction in unique reach costs and a 24% decrease in conversion costs. Citi analyst Ygal Arounian increased the price target for The Trade Desk to $82, maintaining a Buy rating, while Evercore ISI kept an In Line rating with a $90 price target, acknowledging the company’s strong performance but noting ongoing challenges. William Blair also maintained an Outperform rating, highlighting positive developments and strategic upgrades within the company. Despite macroeconomic pressures, The Trade Desk’s recent results and strategic initiatives have bolstered analyst confidence in its market leadership and near-term prospects.
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