BTIG Starts The Trade Desk (TTD) at Neutral

BTIG analyst Clark Lampen initiates coverage on The Trade Desk (NASDAQ: TTD) with a Neutral rating.

The analyst comments "In a Darwinian ad-tech ecosystem where competitive advantages are often fleeting, TTD has carved out a durable position based upon technical quality, independence and transparency. Those advantages have historically driven client growth and budget gains, and while we see runway for more of the same, we're launching at Neutral as consensus appears slightly aggressive relative to our current expectations for '23. Highlights: 1) Checks suggest TTD is entrenched as one of 3-4 primary DSPs in the ad tech ecosystem, and with media buyers looking to consolidate DSP usage, independence should help drive budget share and client wins; 2) TTD can drive those gains by leveraging a foothold in CTV to address new slices of the open auction market like offsite Retail Media, and new channels like private marketplace CTV. The latter might be marginally take-rate dilutive, though Retail Media should be accretive, and, more importantly, both should be accretive to billings/cash flow; 3) As TTD grows against a largely fixed expense base we expect margin expansion and significant free cash flow. We see it as fair to take a multi-year view of cash generation to value the business given the durable and expanding nature of client relationships. A short-hand DCF excluding c-suite SBC suggests ~$3.60 in present value of cash flows and makes an optically aggressive EBITDA multiple look more reasonable relative to TTD's top-line and programmatic industry growth of 20%+. We are bullish on TTD, but consensus appears a touch aggressive to us relative to our base case, and we'll look for signs that either our estimates are too low, or that revision risk has been absorbed as catalysts for revisiting our rating. We rate Trade Desk Neutral with a bull/bear range of $29-102. BTIG does not provide price targets on Neutral-rated stocks."

For an analyst ratings summary and ratings history on The Trade Desk click here. For more ratings news on The Trade Desk click here.

Shares of The Trade Desk closed at $56.39 yesterday.

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