Shares of The Trade Desk (NASDAQ:TTD) could see 30% upside over the next 12 months, according to one analyst. This analyst's bullish take sent shares higher on Friday. The stock climbed 4.4% as of 11:26 a.m. EST. The company is a great "pure play" on digital advertising and is positioned to benefit from political ads during the election year, the analyst argued.

2019 has been a great year for The Trade Desk as the company rides the tailwinds of programmatic advertising and taps into its lucrative business model to invest in growth opportunities and stay ahead of competition. But could the stock just be getting warmed up?

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Why investors should bet on The Trade Desk

Needham analyst Laura Martin upgraded her rating on The Trade Desk stock from hold to buy, giving shares an impressive $325 12-month price target.

Her optimism on the stock comes as The Trade Desk looks to be strategically positioned to benefit from a favorable pricing environment in 2020, she argues. With total U.S. ad unit inventory expected to decline next year as advertisers shift away from linear TV, and demand for ad unit volume simultaneously expected to increase, "Ad units should see unprecedented pricing power in 2020," Martin predicts. The Trade Desk is the largest buyer of ad inventory outside of the walled gardens (e.g., Facebook and Alphabet) and the largest buyer of connected TV ad inventory, and its share of advertising spend on its platform could go up, the analyst said.

Martin also cites analysis from advertising media company GroupM, predicting political ad spend in 2020 will approach $10 billion, making 2020 a particularly important year for The Trade Desk.

Strong fundamentals

A good setup for ad pricing, along with the added catalyst of the presidential election next year, could certainly help bolster The Trade Desk's growth. But it's not like the tech company's lacking in that area in the interim. Revenue increased 38% year over year in Q3, with CTV ad spend on its platfrom jumping 145% over the same time frame. 

Further, management said in its third-quarter earnings call that big increases in the availability of CTV ad inventory and demand for that inventory helped drive revenue growth acceleration for the company as the quarter progressed.

In addition, the impressive economics of The Trade Desk's business enable the company to invest aggressively in maintaining its leadership position as the biggest buyer of digital ad units in the open internet. The company boasts a 29% adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) margin.

"As I have said almost every quarter, we retain the financial flexibility to invest wherever necessary to stay at the bleeding edge of our industry," explained The Trade Desk CEO Jeff Green in the company's third-quarter earnings call.

If Martin is right about these key catalysts for The Trade Desk in 2020, these factors combined with the digital ad-buying company's existing business momentum make a good case for owning the stock through 2020 and beyond.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.