We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Trade Desk (TTD) Hits 52-Week High: To Buy or Not to Buy?
Read MoreHide Full Article
The Trade Desk’s (TTD - Free Report) shares hit a 52-week high of $103.35 on Aug 20 and finally closed at $102.14, up 41.9% year to date. TTD shares have outperformed the Zacks Internet Services industry’s gain of 17% and the Zacks Computer & Technology sector’s return of 22.5%.
TTD is benefiting from an expanding clientele. Strong momentum across TTD’s two initiatives, namely UID2 and OpenPass, which focus on identity and authentication, benefits from increased demand for its advertising services.
In the second quarter of 2024, Roku (ROKU - Free Report) announced its adoption of UID2. This allows advertisers to implement more precise targeting and a secure means to facilitate data collaboration with Roku Media. Sirius XM Media’s Pandora Media became the first audio publisher to adopt UID2.
Moreover, LG Ad Solutions integrated UID2 to enable advertisers to leverage their first-party data across LG’s extensive audience network in a privacy-conscious manner.
YTD Performance
Image Source: Zacks Investment Research
An expanding partner base that includes the likes of Netflix (NFLX - Free Report) , Disney, Comcast’s NBCU, Walmart, Amazon, Fox (FOXA - Free Report) , VerticalScope Holdings, foodpanda and LG Electronics has been a key catalyst.
Fox expanded its partnership with TTD through the integration of UID2 and OpenPath across FOX brands and the AdRise technology platform. E.W. Scripps streamlined its programmatic ad-buying process through the adoption of OpenPass and UID2.
TTD Stock is Overvalued
The Value Score of F suggests a stretched valuation at this moment. TTD stock is trading at a premium with a forward 12-month Price/Sales of 18.07X compared with the Zacks IT Services industry’s 5.98X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
However, the technical indicator is bullish for The Trade Desk as the shares trade above the 50-day moving average, which indicates robust upward momentum.
TTD Shares Trade Above 50-Day SMA
Image Source: Zacks Investment Research
Strong CTV Demand to Aid Top-Line Growth
In the second quarter of 2024, TTD reported revenues of $584.6 million, up 26% year over year, driven by strong adoption of its CTV and retail media solutions. Adjusted EBITDA margin expanded 200 basis points on a year-over-year basis to 41%.
In the near term, The Trade Desk is expected to benefit from strong spending in the CTV and retail media domains. CTV is its fastest-growing channel, as it reaches more than 90 million households and more than 120 million CTV devices.
Video accounted for a high 40% of The Trade Desk business in the second quarter of 2024.
TTD benefits from the growing demand for digital and programmatic advertisement. Total advertising addressable market is trending towards $1 trillion, which presents a significant growth opportunity for The Trade Desk.
Expanding international business bodes well for TTD’s prospects. International growth has outpaced North America for the sixth quarter in a row, with CTV driving growth across both EMEA and Asia Pacific.
2024 Estimate Revision Shows Upward Movement
The Trade Desk estimates third-quarter revenues to be at least $618 million, suggesting growth of approximately 25% on a year-over-year basis. Adjusted EBITDA is expected to be approximately $248 million.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $619.4 million, indicating year-over-year growth of 25.57%. The consensus mark for earnings is pegged at 40 cents per share, up by a penny over the past 30 days.
For the full year, the estimate revision is positive, indicating the benefits of strong demand for its solutions. The Zacks Consensus Estimate for TTD’s 2024 revenues is pegged at $2.45 billion, indicating year-over-year growth of 25.66%. The consensus mark for earnings is pegged at $1.62 per share, up 3.2% over the past 30 days.
The Trade Desk’s strong liquidity position is noteworthy. As of Jun 30, 2024, it had cash, cash equivalents and short-term investments of $1.51 billion and no debt.
Free cash flow was $57 million in the first quarter.
Conclusion
The Trade Desk’s strong portfolio and expanding partner base are positive. TTD shares are expected to continue this upward trajectory, driven by these factors, despite a stretched valuation at this moment.
The Trade Desk currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. However, investors who already own the stock might expect the company’s growth prospects to be rewarding over a longer term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
The Trade Desk (TTD) Hits 52-Week High: To Buy or Not to Buy?
The Trade Desk’s (TTD - Free Report) shares hit a 52-week high of $103.35 on Aug 20 and finally closed at $102.14, up 41.9% year to date. TTD shares have outperformed the Zacks Internet Services industry’s gain of 17% and the Zacks Computer & Technology sector’s return of 22.5%.
TTD is benefiting from an expanding clientele. Strong momentum across TTD’s two initiatives, namely UID2 and OpenPass, which focus on identity and authentication, benefits from increased demand for its advertising services.
In the second quarter of 2024, Roku (ROKU - Free Report) announced its adoption of UID2. This allows advertisers to implement more precise targeting and a secure means to facilitate data collaboration with Roku Media. Sirius XM Media’s Pandora Media became the first audio publisher to adopt UID2.
Moreover, LG Ad Solutions integrated UID2 to enable advertisers to leverage their first-party data across LG’s extensive audience network in a privacy-conscious manner.
YTD Performance
Image Source: Zacks Investment Research
An expanding partner base that includes the likes of Netflix (NFLX - Free Report) , Disney, Comcast’s NBCU, Walmart, Amazon, Fox (FOXA - Free Report) , VerticalScope Holdings, foodpanda and LG Electronics has been a key catalyst.
Fox expanded its partnership with TTD through the integration of UID2 and OpenPath across FOX brands and the AdRise technology platform. E.W. Scripps streamlined its programmatic ad-buying process through the adoption of OpenPass and UID2.
TTD Stock is Overvalued
The Value Score of F suggests a stretched valuation at this moment. TTD stock is trading at a premium with a forward 12-month Price/Sales of 18.07X compared with the Zacks IT Services industry’s 5.98X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
However, the technical indicator is bullish for The Trade Desk as the shares trade above the 50-day moving average, which indicates robust upward momentum.
TTD Shares Trade Above 50-Day SMA
Image Source: Zacks Investment Research
Strong CTV Demand to Aid Top-Line Growth
In the second quarter of 2024, TTD reported revenues of $584.6 million, up 26% year over year, driven by strong adoption of its CTV and retail media solutions. Adjusted EBITDA margin expanded 200 basis points on a year-over-year basis to 41%.
In the near term, The Trade Desk is expected to benefit from strong spending in the CTV and retail media domains. CTV is its fastest-growing channel, as it reaches more than 90 million households and more than 120 million CTV devices.
Video accounted for a high 40% of The Trade Desk business in the second quarter of 2024.
TTD benefits from the growing demand for digital and programmatic advertisement. Total advertising addressable market is trending towards $1 trillion, which presents a significant growth opportunity for The Trade Desk.
Expanding international business bodes well for TTD’s prospects. International growth has outpaced North America for the sixth quarter in a row, with CTV driving growth across both EMEA and Asia Pacific.
2024 Estimate Revision Shows Upward Movement
The Trade Desk estimates third-quarter revenues to be at least $618 million, suggesting growth of approximately 25% on a year-over-year basis. Adjusted EBITDA is expected to be approximately $248 million.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $619.4 million, indicating year-over-year growth of 25.57%. The consensus mark for earnings is pegged at 40 cents per share, up by a penny over the past 30 days.
For the full year, the estimate revision is positive, indicating the benefits of strong demand for its solutions. The Zacks Consensus Estimate for TTD’s 2024 revenues is pegged at $2.45 billion, indicating year-over-year growth of 25.66%. The consensus mark for earnings is pegged at $1.62 per share, up 3.2% over the past 30 days.
The Trade Desk Price, Consensus and EPS Surprise
The Trade Desk price-consensus-eps-surprise-chart | The Trade Desk Quote
Strong Liquidity Position
The Trade Desk’s strong liquidity position is noteworthy. As of Jun 30, 2024, it had cash, cash equivalents and short-term investments of $1.51 billion and no debt.
Free cash flow was $57 million in the first quarter.
Conclusion
The Trade Desk’s strong portfolio and expanding partner base are positive. TTD shares are expected to continue this upward trajectory, driven by these factors, despite a stretched valuation at this moment.
The Trade Desk currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. However, investors who already own the stock might expect the company’s growth prospects to be rewarding over a longer term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.