What happened
Shares of The Trade Desk (NASDAQ: TTD) climbed sharply higher Friday, surging as much as 11.5%. As of 12:41 p.m. EDT today, the stock was up 10.1%. The catalyst driving the programmatic advertiser higher was an upgrade and bullish commentary issued by a Wall Street analyst.
So what
Stephens analyst Nicholas Zangler upgraded The Trade Desk's stock to overweight (buy) from equal weight (hold) on Friday and announced a new share price forecast of $85, up from $70, according to a report by StreetInsider. His new estimate would represent potential gains of 15% for investors over the coming year, compared with Thursday's closing price.
Image source: Getty Images.
The analyst cites The Trade Desk's "dominant positioning" as the leading independent demand-side programmatic advertising platform, and he believes this "makes the stock a compelling pick." Zangler acknowledges its lofty valuation, noting that this is his "biggest hangup." The Trade Desk currently has a forward P/E ratio of 99, and trades at 21 times forward sales.
Despite the stock's somewhat frothy price tag, Zangler believes the accelerating adoption and "proliferation of connected TV (CTV) represents a worthwhile catalyst" for The Trade Desk.
Now what
A greater portion of advertising spend will make the move from traditional television to CTV in the coming years. Zangler estimates that U.S. spending in the space will grow from roughly $9 billion today to $72 billion in the coming years. As the industry leader, The Trade Desk is well positioned to capitalize on this ongoing trend, which could provide the company with a windfall of new business.
Find out why The Trade Desk is one of the 10 best stocks to buy now
Our award-winning analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed their ten top stock picks for investors to buy right now. The Trade Desk is on the list -- but there are nine others you may be overlooking.
Click here to get access to the full list!
*Stock Advisor returns as of June 7, 2021
Danny Vena owns shares of The Trade Desk. The Motley Fool owns shares of and recommends The Trade Desk. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
