HomeNewsThis Adtech Stock Has 53% Downside, According to 1 Wall Street Analyst

This Adtech Stock Has 53% Downside, According to 1 Wall Street Analyst


One analyst recently lifted his price target for adtech specialist The Trade Desk‘s (TTD -7.16%) stock. The raise was significant, however the move does not make this pundit a bull on the up-and-coming stock. In fact, he still believes it is firmly in sell territory.

A bear before and after the latest company update

On Feb. 12, three days before The Trade Desk published its fourth-quarter earnings report, Benchmark’s Mark Zgutowicz reiterated his sell recommendation on the stock. At that point, he pegged it as being worth $32 per share. The stock closed Feb. 12 at $73.91.

In Zgutowicz’s view, the average analyst revenue estimate for the company were too high. Per his forecast, the The Trade Desk was on course to pull in 4% less revenue than the consensus figure for full-year 2024; in terms of year-over-year comparisons, Zgutowicz was modeling a nearly 21% decline over the 2023 number.

The Trade Desk’s fourth-quarter numbers, when released after the market closed on Feb. 15,showed a much higher revenue figure than expected by analysts like Zgutowicz (the company earned $606 million, for 23% year-over-year growth, against the consensus of only $582 million). Non-GAAP (adjusted) earnings increased by 9% to hit $0.41 per share, however that didn’t quite reach the $0.43 modeled by those pundits.

A raise does not mean a buy

That inspired Zgutowicz to revise his price target upward, to $42 per share, on Feb. 16. This did not make him a bull, however, as that’s still far below The Trade Desk’s nearly $89 level as of last Friday’s close. He maintained his sell recommendation. In his opinion, the stock’s valuations remain too lofty to justify its current price.

The Trade Desk is neck-deep in the ever-growing sphere of digital advertising, and it’s proven it can keep the growth engine running while booking a net profit — and during challenging times for industry, at that. Yet Zgutowicz has a good argument that it’s richly valued, so only investors who feel the company can keep producing those solid growth numbers should consider buying the stock.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.




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