The Trade Desk (TTD) delivered a decent Q2 earnings report yesterday, but Wall Street and investors continued to lose patience. BofA Securities analyst Jessica Reif Ehrlich double-downgraded TTD stock to Sell from Buy and slashed her price target to $55 from $130. Several other firms, including MoffettNathanson, Citi, and Wedbush, have also downgraded the stock, citing growth, competition, and valuation concerns. Importantly, TTD stock opened 40% lower on Friday morning.
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Key Analyst Concerns
BofA’s Ehrlich says Trade Desk’s first-ever guidance miss in Q4 2024 was a major red flag. While bulls blamed it on rollout issues with its Kokai platform, Ehrlich pointed out that the Q3 forecast shows slower growth, suggesting deeper problems. She also noted that rising competition from big players such as Amazon (AMZN), which is reporting stronger ad growth.
Although Ehrlich still believes The Trade Desk can grow revenue in the double digits, she argues that its premium valuation is no longer justified. Her new price target of $55 is based on a 20x multiple of 2026 adjusted EBITDA, down sharply from the previous 45x.
Another analyst, MoffettNathanson’s Michael Nathanson, echoed the sentiment. He downgraded TTD to Sell from Hold and lowered the price target to $45 from $75. As TTD’s revenue growth slows and its profit margins shrink, Nathanson argues the stock should be valued more like traditional companies, based on actual earnings and cash flow.
At the same time, Wedbush’s Scott Devitt and Ygal Arounian from Citi downgraded the stock to Hold, citing slower growth, limited visibility, and rising competitive intensity, especially from Amazon’s demand-side platform.
Is TTD a Good Buy?
Turning to Wall Street, TTD has a Strong Buy consensus rating based on 24 Buys and four Holds assigned in the last three months. At $94.58, the average Trade Desk stock price target implies 75.77% upside potential.
