Investing.com -- JMP Securities initiated coverage of Roku (NASDAQ:ROKU) and The Trade Desk (NASDAQ:TTD) with Market Outperform ratings in a note Tuesday, setting price targets of $95 and $150, respectively.
The firm highlights both companies as prime beneficiaries of the $166 billion shift from linear TV ad spending to connected TV (CTV).
JMP notes that TV remains the largest non-digital medium undergoing an online transformation.
Despite 42% of U.S. TV viewing time being attributed to streaming, JMP said that only 22% of TV ad spending is directed toward CTV. This gap, largely due to the dominance of live sports on linear TV, is expected to narrow as streaming platforms acquire more sports rights.
"We expect viewership and ad dollars to increasingly transition to streaming," JMP stated.
For Roku, JMP highlights its reach of over 90 million global streaming households and its coverage of nearly half of all U.S. broadband households.
Key assets include its Home Screen, which serves as the lead-in for 120 million people, and The Roku Channel, the third most popular app on its platform.
"Roku’s OS design for low-cost hardware and user-friendly interface remain key differentiators," JMP noted. The firm sees the current competition in the TV OS market as overblown and expects Roku to sustain its leadership position.
Regarding The Trade Desk, JMP points to its role as the largest independent demand-side platform (DSP) and its unique data and inventory partnerships.
With about half of its spend coming from digital video, including CTV, The Trade Desk is said to be poised to benefit from the shift toward programmatic CTV transactions.
JMP also sees a tailwind from the decline of Google’s AdTech business amid increasing regulatory scrutiny. "We believe The Trade Desk can support higher margins over time," JMP added.
JMP’s price targets are based on 2026 estimated EBITDA multiples, reflecting confidence in both companies’ growth prospects amid the evolving digital advertising landscape.