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UBS initiated coverage on The Trade Desk (NASDAQ:TTD) with a Buy rating and a $100 price target.
The analysts said they estimate that the company’s Connected TV, or CTV, gross spend compounds at 41% ’22-’25E and 52% in an upside case, contributing 17-23 ppts to the consolidated TTD CAGR of 28%, as the U.S. continues to account for 85%+ of spend and global CTV spend continues to outgrow industry estimate (12% ’22-’25E CAGR).
The analysts anticipate that Retail Media Networks, or RMNs, could drive 5ppts of the company’s ’22-’25E CAGR and 7 ppts in an upside case. However their checks suggest that off-site RMN spend needs time to ramp. Consumer and ad buyer surveys show that usage and ad spend for CTV and RMNs will ramp over the next one year.
UBS’ above consensus ’24/’25E year-over-year revenue growth estimate of 29%/25% (consensus 24%/23%), is supported by — the analysts’ expectations for a more accelerated cadence of linear ad budget migrations to CTV in the U.S.; the rate of DIS+ and other CTV players expanding internationally; The Trade Desk’s retail media partnerships scaling outside of Walmart; and contributions from the 2024 U.S. Presidential election cycle.
In addition, the analysts noted that, over the next one year, they could see more upside potential if the company’s Forward Markets solutions (currently in beta) sees broader and quicker than expected adoption, AVOD (Advertising-based Video on Demand) adoption accelerates due to evolving programmer/distribution relationships (similar to Charter/Walt Disney deal), and Netflix/Xandr deal is further reworked to include The Trade Desk.
The Trade Desk has a Hold rating at Seeking Alpha’s Quant Rating system, which consistently beats the market. Seeking Alpha authors’ average rating is also Hold. Meanwhile, the average Wall Street analysts’ rating is more positive with a Buy.