Trade Desk Surges After ‘Standout’ Results. Here’s What Wall Street Thinks

Text size

Trade Desk

stock soared Wednesday after the advertising-technology company delivered solid quarterly results despite a challenging environment.

The numbers pushed analysts to raise their targets for the share price.

In morning trading, shares of Trade Desk (ticker: ) rose 34.8%, to $73.43—the largest percent increase since August 2018 when the stock rose 37.13%

After Tuesday’s market close, the company reported adjusted earnings of 20 cents a share for the second quarter, matching the consensus call reported by

FactSet
.
Adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, came in at $139 million, beating estimates of $122.7 million. Revenue was $377 million, up 25% from a year earlier and beating the consensus call of $364.9 million.

The company forecast third-quarter revenue of at least $385 million, up 28% year over year, while Wall Street had expected $382 million. A prediction of $140 million in adjusted Ebitda was also ahead of the $134 million analysts had projected.

RBC’S Matthew Swanson, who has an Outperform rating on the stock, pushed his target price to $80 from $75. He called the

Trade Desk

results “a standout among peers as management overcame macro-headwinds.”

Needham analyst Laura Martin raised her target price to $65 from $55. She put forward the possibility of

Trade Desk

replacing

Alphabet’s

(GOOGL)

Google

as the dominant digital ad platform, highlighting the global regulatory pressure on Google in a Wednesday research note. Martin has a Buy rating.

KeyBanc’s Justin Patterson, who has an Overweight rating, lifted his target price to $70 from $52 earlier. He views Trade Desk as a leading independent ad-tech company with a significant opportunity to expand internationally. In the second quarter, North America represented 90% of revenue, up from 88% in the first quarter.

To be sure, not every analyst is bullish on Trade Desk. Benchmark’s Mark Zgutowicz has a Hold rating and a $54.50 target price. He doesn’t see enough catalysts to press the shares much higher, particularly in a recessionary environment.

Zgutowicz acknowledges that ad volumes will remain strong through the year’s second half, aided by political ad spending, but he doesn’t see Connected TV advertising momentum being sustained.

In its earnings call, Trade Desk hyped up CTV several times. Its website in big letters says that three-quarters of all its global advertisers run Connected TV or Over-the-top (OTT) ads through its platform.

“If we continue to execute, I believe we will benefit as much as any company in the world from this tailwind,” founder and CEO Jeff Green said.

In May, streaming giant 

Netflix

 (NFLX) said it was exploring ways to add a more affordable subscription option. This sent shares of Trade Desk soaring as analysts flipped their rating on Trade Desk to Buy on a potential deal. Ultimately,

Netflix

chose

Microsoft

(MSFT) as its exclusive partner to serve ads.

To Green, this is still a positive.

“We believe it’s another strong indication that more industry leaders recognize the opportunity of the open Internet compared to the dangers and limitations of walled gardens,” he said, pointing to Google’s position as a closed platform that has significant control over its content, hardware and more.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com