On Friday, Evercore ISI maintained its Outperform rating on The Trade Desk (NASDAQ:TTD) stock and increased the price target from $110.00 to $135.00. The firm's analyst highlighted the company's third-quarter earnings, which achieved a modest beat and bracket result for the second consecutive quarter. Despite this performance, The Trade Desk's shares experienced a roughly 10% decline in after-market trading.
The analyst pointed out that The Trade Desk's stock is one of the most expensive that they cover, trading at approximately 46 times its estimated 2025 enterprise value to EBITDA. However, the firm believes that The Trade Desk's premium valuation is justified due to its strong fundamental profile, which includes expectations for sustainable revenue growth exceeding 20% and EBITDA margins above 40%.
The Trade Desk's consistent delivery of premium revenue growth and EBITDA margins was attributed to its excellent track record of product innovation and operational execution. The firm emphasized The Trade Desk's reliability as a company for investors, noting its dependable performance.
Looking to the future, Evercore ISI sees significant long-term growth drivers for The Trade Desk, including opportunities in connected TV (CTV), retail media, international expansion, and potential benefits from disruptions in Google (NASDAQ:GOOGL)'s Network Ads business. These factors contribute to the firm's confidence in maintaining the Outperform rating for The Trade Desk's stock.
In other recent news, The Trade Desk has been subject to a series of adjustments by various analyst firms. New Street Research downgraded the stock from Neutral to Sell, citing concerns for the year 2025 despite the company's anticipated strong performance in the short term. On the other hand, Citi, KeyBanc, Jefferies, HSBC, and Truist Securities all increased their stock price targets for The Trade Desk, reflecting confidence in its growth potential.
The Trade Desk's Q2 sales saw a 26% increase and an improved adjusted EBITDA margin of 41%, with a projected Q3 revenue of $618 million and an expected adjusted EBITDA of around $248 million. These financial results and projections are crucial for investors. The company's revenue is projected to meet or even slightly surpass the forecasted $623 million, according to KeyBanc.
Analysts from various firms have expressed increased confidence in the company's ability to maintain a growth rate of over 20% in the coming years. This growth is anticipated to be driven by advancements in connected TV (CTV) and retail media, with the potential for accelerated growth due to regulatory changes. Despite the positive outlook, investors are advised to monitor the company's performance closely.
InvestingPro Insights
The Trade Desk's recent performance and Evercore ISI's optimistic outlook are further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $65.37 billion, reflecting its significant presence in the digital advertising space. TTD's revenue growth remains robust, with a 25.91% increase in the most recent quarter, aligning with Evercore's expectations of sustainable growth exceeding 20%.
InvestingPro Tips highlight TTD's financial strength, noting that the company "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations." These factors contribute to the firm's stability and ability to invest in innovation, which Evercore ISI identified as a key driver of TTD's success.
The company's impressive gross profit margin of 81.23% underscores its operational efficiency, supporting the analyst's view on TTD's premium valuation. This is further reinforced by an InvestingPro Tip stating that TTD has "impressive gross profit margins."
Investors should note that while TTD's stock is trading near its 52-week high and has shown significant returns over various timeframes, it is also trading at high valuation multiples across several metrics. This aligns with Evercore's observation about TTD's expensive valuation relative to peers.
For those seeking a deeper understanding of TTD's financial health and market position, InvestingPro offers 21 additional tips, providing a comprehensive analysis to inform investment decisions.
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