BTIG starts The Trade Desk at Neutral, but with upbeat outlook
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Ad-tech The Trade Desk (NASDAQ:TTD) has a durable position that looks to produce more client growth and budget gains, research firm BTIG says, but it's initiating coverage at Neutral due to what looks like some "slightly aggressive" consensus expectations.
The company looks to have some lasting advantages in a "Darwinian ad-tech ecosystem" where such advantages can be fleeting, analyst Clark Lampen said. It's one of the dominant demand-side platforms for both agency and non-agency customers, sporting a significant shares of a growing market in connected TV, he noted.
Its independence should help drive budget share and client wins, and leveraging the foothold in CTV will help address new slices of the open auction market, like offsite Retail media, as well as new channels like private marketplace CTV, he said.
Meanwhile, a multi-year view of cash generation - appropriate given the "durable and expanding nature" of client relationships - points the way toward margin expansion and "significant" free cash flow against a largely fixed expense base, he noted.
Aggregate feedback to a series of the firm's checks "cemented that Trade Desk has unique, durable advantages in the programmatic ecosystem and a lack of [first-party] inventory conflicts makes it a partner of choice relative to key competitors like DV360 (GOOG) (GOOGL), Xandr (MSFT), and Yahoo (VZ)."
TTD stock was up 1.7% Friday afternoon.
"We are bullish on TTD, but consensus appears a touch aggressive to us relative to our base case, and we'll look for signs that either our estimates are too low, or that revision risk has been absorbed as catalysts for revisiting our rating," Lampen said. BTIG doesn't give price targets for Neutral stocks but it has a bull-bear range of $29-$102 per share, vs. a current $57.37.
The Trade Desk's stock jumped by a third in mid-February after a strong second-quarter earnings report.