Citi Sees More Upside In The Trade Desk Shares Despite Recent Rally, Starts At Buy

Citi sees 17.6 percent potential upside in Trade Desk Inc TTD shares as it started coverage of the stock with a Buy rating and $31 target price, saying that despite recent rally, the company’s conservative outlook would lead to stock price appreciation.

Trade Desk offers a self-serve, demand side platform (“DSP”) to advertisers, where clients can programmatically target viewers across devices, such as computers, smartphones, tablets and gaming consoles.

“We remain cautious on the greater ad tech group, but believe the TTD’s business model and API, paired with the ability to buy advertising inventory across channels, leaves it well positioned to continue taking share from higher-priced and/or niche alternatives (both full-service and self-serve),” analyst Mark Kelley wrote in a note.

Kelley expects upside from international expansion as Trade Desk has only just begun its expansion outside of the U.S., with focus on Greater China, Indonesia, pan-EMEA and Southeast Asia in 2017. Importantly, international was only 8 percent of spending in the first half.

“[W]e believe the company will be able to leverage its existing domestic relationships with it agency holding companies abroad (WPP, Omnicom, etc.),” Kelley added.

Related Link: The Trade Desk Is A Leading Ad Tech Platform That Jefferies Recommends You Buy

In addition, Programmatic TV (PTV) opens up an entirely new category and potential for upside in estimates.

“The addition of PTV sometime in 2017 opens a $4 billion opportunity for TTD, the addition of which would be entirely incremental to our estimates for 2017 and beyond,” the analyst added.

Further, the analyst pointed out the company’s stable base of 390+ customers, most of which continue to increase their spending on its platform. Also, Kelley believes the company’s API has created stickiness among its agency-base, which at this point is a key differentiator.

Kelly expects EPS of $0.67/$0.71/$1.09 for 2016/2017/2018, respectively.

Shares of Trade Desk closed Friday’s trading at $26.36. In the pre-market hours, the stock is up 3 percent to $27.17, and at last check, they were up 0.72 percent at $26.55.

Full ratings data available on Benzinga Pro.