Shares of Trade Desk Inc (NASDAQ:TTD) rose in early trading on Tuesday, after the company reported its third-quarter results. Five analysts raised their price targets:
- Scotiabank analyst Nat Schindler reaffirmed a Sector Perform rating, and raised the price target from $12 to $15.
- RBC Capital Markets analyst Matthew Swanson maintained a Sector Perform rating and raised the price target from $15 to $18.
- Guggenheim Securities analyst Michael Morris reiterated a Neutral rating, while taking the price target higher from $13 to $16.
- Rosenblatt Securities analyst Barton Crockett reaffirmed a Neutral rating, while lifting the price target from $12 to $15.
- Needham analyst Laura Martin reiterated a Buy rating and price target of $19.
Check out other analyst stock ratings.
Scotiabank: Trade Desk’s quarterly results beat expectations, with revenue of $736 million and EBITDA of $266 million, Schindler said in a note. This lowered the probability that the second-quarter reset reflected “an uncontrolled competitive deterioration,” he added.
The analyst noted that the stock’s initial gains evaporated after the earnings call because the seemingly strong headline numbers included:
- Political ad spending, which made up a mid-single-digit percentage of sales and will rise slightly in the fourth quarter.
- A one-time boost of 300 basis points (bps) from a strategic partner.
“Consequently, the headline revenue beat and $755M+ 4Q guide provide a less clean read on underlying growth than initially appeared,” he further wrote.
RBC Capital Markets: Trade Desk’s performance improved in the third quarter, Swanson said. Although revenue declined by 0.5% year-on-year, the figure was “meaningfully above guidance,” he added.
Although results were boosted by a one-time benefit from a strategic partner and strong political spending, the third quarter was “a step in the right direction as management looks to regain momentum within its customer base,” the analyst wrote.
Guggenheim Securities: Trade Desk’s third-quarter results and fourth-quarter guidance boost confidence that the outlook provided with the second-quarter earnings “represented a low point for trends and sentiment,” Morris said.
Even after excluding strong political spend and a one-time benefit from business with a strategic partner, core revenue and adjusted EBITDA were ahead of expectations, he added.
The fourth-quarter guidance reflects “sequentially weaker core growth,” which the market is likely to consider as conservative, the analyst further stated.
Rosenblatt Securities: While Trade Desk’s revenue declined by 0.5% year-on-year, this was better than guidance of a 12% contraction, Crockett noted. Adjusted EBITDA fell 16% year-on-year but exceeded guidance by $106 million, he added.
Management’s revenue guidance of at least $755 million was around 10% above consensus of $688 million, the analyst stated. “Revenue is guided to worsen, even though the contribution from political is guided to grow somewhat (we assume ~200 bps),” he further wrote.
Needham: Trade Desk guided to an 11% year-on-year decline in fourth-quarter revenue, with adjusted EBITDA down around 30%, Matin said. The company reduced its workforce by 15%, she added.
“We believe TTD should make a transformational acquisition, or cut its take rate by 30%-50%,” the analyst wrote. Magnite Inc (NASDAQ:MGNI) could potentially acquire Trade Desk within two years, she further stated.
TTD Price Action: Shares of Trade Desk had risen by 1.77% to $15.20 at the time of publication on Tuesday.
