The Trade Desk (NASDAQ:TTD) is set to report its fourth quarter results on Wednesday, and analysts at Wedbush say the company is likely to post continued growth while facing mounting competitive pressures.
The firm maintained a ‘Neutral’ rating on the stock and lowered its 12-month price target to $23 from $40, reflecting concerns about competitors consolidating ad spend into closed ecosystems. Shares traded hands at about $24 on Tuesday.
Wedbush expects Q4 revenue of $841 million, up 14% year-over-year, with adjusted EBITDA of $376 million, in line with the consensus.
The analysts believe that The Trade Desk “should continue to see topline growth for the foreseeable future, driven by linear advertisers’ ongoing migration to connected TV (CTV) and other digital platforms, including audio; deep integration across the media and digital landscape, particularly outside of walled gardens, with expanding partnerships; and its content-agnostic approach.”
At the same time, Wedbush highlighted challenges from rival platforms that combine content, data, and commerce. “Competitor platforms that integrate content, data, and commerce into a single environment incentivize ad buyers to remain within that ecosystem rather than routing it through The Trade Desk,” the analysts wrote, noting Amazon’s partnerships with Disney, Roku, and Netflix as key competitive pressures.
Margins are expected to contract 250 basis points to 44.7% due to higher hosting costs and staffing pressures.
Wedbush added that while The Trade Desk benefits from the broader shift of advertising budgets online, “artificial intelligence is accelerating ad-spend consolidation into closed online ecosystems, where the platform owns identity, purchase data, and full-funnel attribution.”
The analysts noted that operating on the open internet “is structurally disadvantageous, where identity is fragmented, measurement is probabilistic, and conversion data is limited.”