Shares of Roku (NASDAQ:ROKU) and The Trade Desk (NASDAQ:TTD) are jumping in after-market hours on Thursday. As of 6:30 p.m. EDT, Roku was up 4.2% and The Trade Desk was up 2.3%. The gains come as RBC Capital analyst Mark Mahaney upgraded both stocks to outperform following a sell-off in their share prices in recent months.

The Trade Desk and Roku are both down about 35% from their 52-week highs achieved earlier this year. But both of their underlying businesses are booming, benefiting from a strong secular tailwind in streaming TV. Mahaney thinks it's time for investors to scoop up shares of these fast-growing companies at these lower prices.

A group of young people watching TV.

Image source: Getty Images.

Roku: A $155 12-month price target

Along with his rating change for Roku shares on Thursday, Mahaney boosted his 12-month price target for the stock from $107 to $155, noting that the stock's valuation is more attractive after its recent pullback. In addition to Roku stock's more attractive valuation, the analyst cited the company's strong positioning in streaming TV trends.

The company's aggressive focus on expanding its platform through sales of low-cost hardware and licensing agreements with smart TV manufacturers has helped it gain significant market share in the U.S. Roku currently powers 39% of all streaming media players in the U.S., according to a survey from Parks Associates. This crushes the competition. Strategy Analytics estimates that Roku powers 36% more over-the-top devices and smart TVs in the U.S. than its closest competitor.

Roku monetizes its platform by offering both subscription-based and ad-supported streaming services for its users. The company, of course, takes a cut of these fees. Advertising, in particular, has been a boon for Roku. And it dominates in this subsegment of its business as well -- Roku streamed 69% more ads than its closest competitor in the streaming platform space, according to Comscore. 

Capturing the company's momentum, Roku's platform revenue surged 86% year over year in Q2, an acceleration from 79% growth in Q1. 

The Trade Desk: A $250 price target

Though Mahaney similarly upgraded his rating for The Trade Desk shares to outperform, he didn't increase his price target for the stock. But that doesn't mean he isn't anticipating significant share-price appreciation. His current price target of $250 implies 35% upside.

Similar to his thesis for Roku, Mahaney believes the The Trade Desk's valuation has become compelling after the stock's decline. In addition, he cites the company's positioning amid a powerful tailwind from a shift from linear TV to streaming. Further, Mahaney is impressed by the company's revenue growth rate and its robust earnings before interest, taxes, depreciation, and amortization (EBITDA) margin.

In Q2, The Trade Desk's revenue rose 42% year over year. The company's two fastest-growing ad channels were connected TV and audio, where ad spend increased 150% and 270% year over year, respectively. 

For the full year, The Trade Desk expects revenue of at least $653 million, implying 37% growth. Management expects adjusted EBITDA in 2019 to be $201 million, or about 31% of revenue.