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Investing.com -- Morgan Stanley downgraded The Trade Desk to Equal-weight, saying growth in the company’s core connected TV advertising business is slowing as competition and advertiser concerns mount.
“We have been wrong about the durability of TTD’s growth in the face of lingering execution concerns, softness in the open web ad market, and intensifying competition in CTV,” analysts wrote.
Third-quarter guidance for 14% revenue growth “has reignited questions that first emerged with its 4Q:24 miss and implies continued challenges ahead.”
Morgan Stanley lowered its price target on the stock to $50 from $80 given weaker trends in video ad billings, which fell to about 11% growth in the second quarter from over 30% in earlier periods.
“The key questions now are whether restructuring can meaningfully reaccelerate growth in the near term and whether TTD can defend its leadership in CTV against competitors including AMZN,” analysts said.
The brokerage also flagged advertiser pushback. “Our checks suggest TTD’s take rates are nearly 2x that of other leading DSPs, while OpenPath and Kokai are viewed as consolidating control and reducing flexibility, arguably reminiscent of past objections to GOOGL DV360.”
Competition from Amazon’s advertising platform is rising. “Amazon’s DSP is expanding faster than expected, with new Roku and Disney deals extending reach to ~80mn US CTV households and adding premium supply across Disney+, ESPN, and Hulu, threatening TTD in areas where it has historically benefitted.”
Morgan Stanley cut its 2025 and 2026 revenue forecasts by 2% and 3%, with adjusted EBITDA lowered 4% and 6%.
The brokerage said it remains constructive on The Trade Desk’s position as “the leading independent DSP in the open internet,” but sees limited upside given current pressures.