What happened
Shares of The Trade Desk (TTD 2.52%) charged sharply higher this week, surging as much as 15.9%, according to data provided by S&P Global Market Intelligence. As of 1:48 p.m. ET Thursday, the stock was up 11.5%.
While it was no doubt buoyed by the general market updraft and overall positive sentiment that prevailed this week, the digital advertising specialist also got a boost, courtesy of bullish comments made by a Wall Street analyst.
NASDAQ: TTD
Key Data Points
So what
Morgan Stanley analyst Matthew Cost initiated coverage of The Trade Desk with an equal weight (hold) rating. He also issued a $60 price target, which represents gains for investors of roughly 19% compared to last Friday's closing price. While that's not usually the stuff of big price spikes, it was what the analyst had to say about the company that buoyed investor sentiment.
Cost called The Trade Desk "the premier independent DSP [demand side platform]," noting its leadership position in connected TV (CTV). As a result of its independent platform and industry-leading technology, he believes The Trade Desk will expand its share of open internet advertising, and expects its billings will increase at a compound annual growth rate 28% over the coming three years. The hold rating was merely a valuation call, which Cost says "seems full."
Now what
The company's second-quarter results, released in early August, helped to demonstrate The Trade Desk's dominance in the ad tech space. Even in the midst of macroeconomic turmoil, revenue grew 35% year over year, while its adjusted earnings per share crept 11% higher.
Furthermore, CEO Jeff Green noted that leading brands were signing major new contracts or expanding long-term agreements, even as other digital advertisers were facing cutbacks. "This trend also gives us confidence that we will continue to gain market share in any market environment," Green said. Given the current macroeconomic conditions, that's a bold prognosis.
In the face of the company's continued strong performance, industry leadership, and the secular tailwinds driving the ad tech sector, The Trade Desk stock is a buy.
