DA Davidson Out Bullish On Yext, Trade Desk

Internet services companies Yext Inc YEXT and Trade Desk Inc TTD havbe earned top-notch ratings from D.A. Davidson, notwithstanding the strong year-to-date gains made by both stocks. 

The Analyst

Tom White initiated coverage of Yext with a Buy rating and $28 price target, while Trade Desk was started with a Buy and $158 price target.

Yext Positioned On The Digital Info Frontier 

The fragmentation and complexity of the digital knowledge industry creates opportunity for Yext, White said said in the initiation note. (See his track record here.) 

Yext is a platform to manage all digital knowledge — including listings, reviews and local pages —and link it to its network of about 150 leading publishers and platforms such as Alphabet Inc GOOGL G, Apple Inc. AAPL Maps and Siri, Amazon.com, Inc. AMZN's Alexa, Facebook, Inc. FB, Tripadvisor Inc TRIP and Yelp Inc YELP.

Yext's services are sold via subscriptions in several packages, with contracts typically one to three years in duration and paid upfront, the analyst said. The company's dollar retention rate is 109-120 percent, and it generates annual revenue per location of $130-$135, suggesting a global total addressable market for its location license type in the range of $10 billion to $13 billion, he said. 

"YEXT helps its customers better prep for/navigate the next eventual/inevitable shifts in how people access digital information." 

Trade Desk Makes The Right Strategic Bets

Trade Desk's most compelling strategic growth opportunities in the near-to-intermediate term lie in video and connected TV and helping marketers access current and future generations of emerging middle-class customers, particularly outside the U.S., White said in a separate initiation note. 

Trade Desk provides software that allows advertisers to buy and manage digital ad campaigns across various ad channels and formats. 

About $240 billion is spent on TV advertising globally, the analyst said. He sees Trade Desk's digital opportunity in video and connected TV to be far less susceptible to global domination by the likes of Google and Facebook.

The company has other unique opportunities such as a focus on ad agencies, fully transparent pricing and an open API-based platform, allowing advertisers to layer in their own first-party data to improve campaign returns on investment, White said. 

The company's client retention rate has been 95 percent for the past 18 quarters, according to D.A. Davidson. 

The Price Action

Yext shares have added about 69 percent year-to-date, while Trade Desk shares have jumped 188 percent.

Yext was down 1.62 percent at $19.99 at the time of publication Tuesday, while Trade Desk was down 1.7 percent at $129.66.

Related Links:

Trade Desk's Strong Platform Appreciated By This Analyst

Trade Desk Rallies To All-Time High After Q1 Print

Photo courtesy of Yext.