- Analysts give TTD a STRONG BUY rating
- most recent 12-month price target is +54.68% upside
- While activity is not stable, it always rebounds higher
- Earnings consistently beat consensus estimates
- Sales maintain upward momentum
The Trade Desk (NASDAQ: TTD) stock has consistently followed a dramatic up-and-down trend since going public in 2016. And while the current stock value may be within the lower 25% of the 52-week range ($39.00 to $114.09)—and remains down 41.86% on the year so far—its updated 12-month price target represents a +54.68% upside from the last price of $53.24. The consensus estimate of $82.35 rests near the perfect median of the estimated target range of $59.00 to $108.00, indicating stable forward momentum.
For this reason,and more, analysts have given The Trade Desk a rating of STRONG BUY.
TTD Stock Maintains Steady Upward Trends
Although the current numbers might appear less-than-favorable, historically, The Trade Desk has always kept a positive outlook. Indeed, their growth tends to be remarkably resilient.
For example, shares shot up on 3/1/2020, closing at $19.30 and quickly escalating to a new high of $90.107 by 11/01/2020. The stock peaked here, wavering down and up again to eventually rebound, a bit. The stock bottomed out again at 05/01/2021—with a low of $58.814—before bouncing back again, on its way to a new lifetime high ($103.42 on 11/01/2021).
Apparently, TTD not only maintains a consistent upward trend but the stock seems to reach new highs in early November. With the next earnings reporting date coming soon (November 9), it will be interesting to see if the trend continues.
Earnings and Sales are Strong
Speaking of earnings, TTD currently carries an Earnings Per Share (EPS) value of $0.23 EPS on sales of $386.1M.
TTD beat the consensus estimate 3 out of the last 4 quarters. In fact, all 3 of those earnings beats bested the entire range as well. Furthermore, the only quarter in which TTD did not beat the estimate—the most recent, Q1 of 2022—actual earnings easily met the consensus estimate. It should be noted, however, that each quarter alternated up and down estimates.
For example, the consensus estimate for Q3 2021 was $0.15 (with an actual earnings of $0.18). The consensus estimate for Q4 2021 was $0.27 but the same metric for Q1 2022 slipped back down to $0.15 and bounced back up to $0.2 in Q2 (when actual earnings hit the mark).
On an annual basis, earnings follow an entirely upward climb, showing even better results than the last four quarters. Since 2018, reported earnings have increased from $0.27 to $0.91. In fact, actual earnings beat not only the estimate but also the range over most of the last four years.
The only year in which TTD earnings did not beat the range, 2019, with actual earnings of $0.37 meeting the range high.
For The Trade Desk, sales may be a better indicator of their valuation strength. On a quarterly basis, earnings have consistently beat the estimate and nearly beat the range in each of the last four quarters. The same is true on an annual basis, with annual sales beating the range half the time, and nearly missing the high estimate the other half.
Persistence Keeps TTD Ahead of its Industry
PubMatic (NASDAQ: PUBM) is a similar tech company but whose focus is the other side of the advertising industry. While their businesses are on opposite sides of the industry, PUBM and ZM share projected earnings of around 13.15% ($0.68 to $0.77 per share). However, PUBM is a BUY, meaning it is not as strong as TTD.
Zoom Video Communications Inc. (NASDAQ: ZM) is another TTD peer, but only has a HOLD rating.
Some experts feel like these two, specific, ad-tech companies will hold steady during yet more rocky times. Of the three, TTD is the only one to break 1% of its 52-week ratio. In fact, it is nearly 20% of the range. While that is still on the low side, it is certainly far better than the other two, which are nearly out of range completely. With an upside of 54.70%, it is certainly not in a terrible position to make a move, though it would be harder with a Price/Sales ratio of 22.05 (more than 4 and 8 times that of ZM and PUBM).
Of course, TTD has an astronomical P/E ratio (777.4), meaning it could be extremely overvalued right now, especially compared to the 18.13 and 25.99 from PUBM and ZM, respectively. And with a beta of 1.88, it is the only stock (of the three) that is more volatile than the S&P. The other two, in fact, are 17% and 137% LESS volatile.
Secondly, though, The Trade Desk's second-quarter report indicates revenue is up 35% to $377 million since the same period last year. With more market opportunity in the long term, The Trade Desk extends far more promising endeavors; after all, analysts currently project earnings growth of 152.7%. And at its current price, this promise could extend to any investor who is willing to take some of the risks on what looks to be a STRONG BUY.
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