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Can The Trade Desk Stock Keep Going After Last Week's 53% Pop?

By Rick Munarriz – May 14, 2018 at 10:07AM

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Wall Street loves last week's blowout report by the programmatic advertising speedster, but the stock's surge pushes the stock above half of price targets set earlier in the week by bullish analysts.

One of last week's biggest winners was The Trade Desk (TTD 3.29%), surging 53% higher after posting blowout financial results. At least four analysts would go on to jack up their price targets on the provider of next-gen programmatic advertising services.

The big push sent the shares barreling through the all-time highs it had set back in October. Talking about "all-time highs" may not seem like a big deal for a stock that's only been public for less than two years, but the stock's been a rock star in its short stint on the exchange. The Trade Desk has more than quadrupled -- up 320% -- since going public at $18 just 20 months ago.

A California license plate with the words THE DESK on a front desk, along with a sign that says the Trade Desk best places to work in NYC.

Image source: The Trade Desk.

Let the machines do the marketing

The Trade Desk's platform is booming popularity. Brands are turning to The Trade Desk's algorithmic approach to allocating marketing spend on campaigns across all media. Revenue surged 61% in the first quarter, well ahead of both the 37% that it was forecasting for the period three months earlier and the 35% that Wall Street was expecting. The news gets even better on the bottom line, with adjusted earnings nearly doubling to $0.34 a share. Analysts were only holding out for $0.10 a share. 

Pulling off one of the biggest beats of this earnings season is naturally going to draw investors, and analysts are also beefing up their opinions. Kerry Rice at Needham is increasing his price target on the stock from $66 to $75 after the blowout performance. He sees The Trade Desk continuing to gain market share. 

John Egbert at Stifel is also joining Rice at $75, up from his earlier price goal of $69. Egbert points to The Trade Desk's strong outlook for the second quarter and the upward revision of its full-year guidance as a good reason to move the bar higher. 

Mark Mahaney at RBC Capital and Piper Jaffray's Sam Kemp were even more aggressive, pushing their price targets up to $80 from the mid-$60s. Mahaney points out that the marketing budgets continue to shift toward The Trade Desk's programmatic advertising solution. Kemp notes that data engagement with clients is accelerating, making the platform even more effective for advertisers. 

All four analysts are naturally bullish on the stock, but valuation concerns may begin to poke their heads through the clouds. The stock's 53% surge last week has now pushed the stock just above the $75 target at Needham and Stifel. It's hard to bet against The Trade Desk given the kind of encouraging traction that its demand-side platform is generating, but investors need to keep in mind that no stock continually goes up in a straight line. 

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Trade Desk. The Motley Fool has a disclosure policy.

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