On Monday, Seaport Global Securities began coverage on The Trade Desk (NASDAQ:TTD), a leading digital advertising platform, with a Neutral rating. The firm's analyst cited the company's position as a leader in the digital ad buying space and its potential for long-term growth, which is expected to be driven by factors such as Connected TV (CTV), international expansion, shopper marketing, and market share gains.
The Trade Desk is anticipated to witness approximately 20% long-term growth, with the possibility of EBITDA margins increasing to around 50% over time, compared to approximately 40% in 2023. The analyst also noted the current high levels of stock-based compensation (SBC).
Despite the optimism regarding The Trade Desk's fundamentals, the analyst believes that the current risk/reward profile is fairly balanced. This assessment comes as the company's shares are trading at approximately 30 times the firm's estimated 2025 EBITDA and around 12 times the 2025 revenue projections.
Furthermore, the report mentioned that mixed data points in digital brand advertising during the fourth quarter could potentially limit upside and affect future guidance. The base case price target for The Trade Desk's stock is set at $69, based on 30 times the estimated 2025 EBITDA. The bear and bull case price targets are $42 and $88, respectively, calculated at 20 times and 35 times the estimated EBITDA.
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