Analyst Says Trade Desk Can Shake Off Challenges, Ride Streaming's Next Big Wav

Rosenblatt analyst Barton Crockett initiated coverage on The Trade Desk (NASDAQ:TTD) on Tuesday with a Buy rating and a price target of $77.

Crockett launched coverage of the Trade Desk as a key pillar of his initiation of DSPs and SSPs in AdTech.

The analyst noted that the Trade Desk, as the leading DSP, has appealing exposure to the secularly constructive growth of CTV and programmatic and the expansion of the open Internet.

Also Read: Jim Cramer Says Trade Desk Needs to Answer Tough Questions as Stock Struggles

The main issue right now is macro concerns prompted by Trump’s tariff wars.

For Trade Desk, there are also nascent concerns about rising competition from Amazon.Com Inc (NASDAQ:AMZN) and execution issues on the rollout of a new Kokai version of its core ad buying platform.

However, Crockett expects policy pressures from Trump to abate ahead of the midterms.

The analyst noted that Amazon’s competition will prove navigable. He also said Kokai interface issues are addressable. Crockett also emphasized the potential for upside from the recent AdTech antitrust decision against Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) Google.

Trade Desk shares over the past two years have traded in an elevated EV/EBITDA range of over 40 to 50 times. However, the stock dropped 33% to $81.92 the day after reporting fourth-quarter of 2024 results on Feb. 12 and has slid more since then to a recent close near $54, and a 55% drop over the last 3 months.

The proximate cause was a moderate miss versus the fourth quarter of 2024 guidance, its first in 33 quarters as a public company, and somewhat light guidance for the first quarter of 2025 and 2025. But consensus estimates, which Crockett noted as reasonable given the macro ends up being OK, appear to be in a decent place, at a 12% and 13% trim to adjusted EBITDA from before and ~+10% and ~+25% Y/Y growth in 2025 and 2026, respectively.

The stock slide has compressed the multiple more than half to an EV of 21.5 times 2025 adjusted EBITDA.

The analyst noted that the Trade Desk’s multiple can recover somewhat in a better environment.

Trade Desk remains a direct and leading participant in the strong and accelerating secular trend toward streaming TV viewership, which is driving TV advertising towards Connected TV and programmatic. Streaming viewership on TVs increased by 9% on average year-over-year (Y/Y) in the first nine months of 2024, rising to an average of 16% growth in the last six months, ending in March.

Programmatic ad growth in the US averaged +25% from 2020 to 2022, slowed to +4 % in 2023, and rebounded to +18% in 2024 (IAB/PwC). CTV ad growth in the US averaged +18% from 2022 to 2024 and is seen up in the mid-teens in 2025 by the IAB/PwC.

Trade Desk, the most extensive independent DSP, with $12 billion of gross spending in 2024, has a history of participating in this secular growth, with Crockett estimates that gross spending increased an average of 23% year over year from 2021 to 2024.

Crockett projected first-quarter revenue of $578.7 million and EPS of $0.25.

Price Action: TTD stock is up 0.5% to $54.67 on Tuesday.

Read Next:

• Google GenAI, AI Cloud Services Drive Analyst Confidence In Long-Term Growth

Photo: Shutterstock