The Trade Desk cut to Sell at New Street Research
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The Trade Desk (NASDAQ:TTD) was downgraded by New Street Research to Sell despite raising the price target to $69 from $57.
New Street analysts noted that they remain bullish on the company's long-term gross spend opportunity (including in CTV), and that the company' data marketplace is growing more robust with the inclusion of additional retail media partnerships. However, they remain cautious on the battle for economics with agencies and sell-side platforms (SSPs), and think questions remain on the outlook for the company's identity strategy.
The analysts expect good results at the quarter but see a low likelihood that near-term estimate revisions can support recent multiple expansions.
In addition, as we enter Q3'23, TTD and the rest of the programmatic ecosystem are less than a year away from Google Chrome's phase out of third-party cookies in Q3'24, and the start of 1% third-party cookie deprecation tests in Q1'24. As such, the analysts expect an overhang to build up over the next several quarters.
The analysts think UID2 and EUID are gaining wide adoption, but so are other identity solutions (like RAMP or ID5) as ecosystem players adoptmultiple solutions to see what performs best in the absence of cookies. The firm estimates that 24% of TTDâs gross spend in 2024 will be on the Chrome browser.
The analysts think TTD will gain access to walled garden inventory over the long-term, but the near term probabilities have weakened. Meta, YouTube, Amazon, and Netflix are four important areas of digital advertising growth where TTD does not transact today. The analysts noted that access to Walled Garden video ad inventory would represent upside to their estimates.
The firm continues to see competitive positionings emerging among agencies and SSPs which could impact spend from some of TTD's top clients.
The analysts raised their target price to $69 from $57 as they roll over valuation to 2024. The analysts think that TTD deserves a premium because of its continued market share gains and higher profitability than peers.
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