Seaport Global Securities Initiates Coverage of The Trade Desk with a Neutral Rating
Seaport Global Securities has commenced coverage of The Trade Desk, a major player in the digital advertising industry, assigning it a Neutral rating. The firm’s analyst has emphasized The Trade Desk’s dominant position in the digital ad buying sector and its potential for long-term growth, driven by factors such as Connected TV (CTV), international expansion, shopper marketing, and market share gains. Research indicates that The Trade Desk is expected to experience approximately 20% long-term growth, with EBITDA margins projected to rise to around 50% by 2023.
However, given the current stock valuation, the analyst believes that the risk/reward profile for The Trade Desk is fairly balanced. The company’s shares are trading at nearly 30 times the estimated 2025 EBITDA and approximately 12 times the revenue projections for 2025.
The report also highlights that there are mixed data points in digital brand advertising during the fourth quarter, which may potentially constrain upside and affect future guidance. Seaport Global Securities has set a base case price target of $69 for The Trade Desk’s stock, 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.
Analyst comment
The news is neutral. The market for The Trade Desk is expected to experience long-term growth driven by various factors. However, the current risk/reward profile is deemed balanced. The stock price is currently high and mixed data in advertising may constrain future growth. The base case price target is $69, with bear and bull cases at $42 and $88 respectively.
