The Trade Desk: 3 reasons to buy before a new all-time high

Key Points

• Shares have popped following last week’s blowout report. 
• Analysts are targeting 2021’s all-time high as the next stop, but there’s still time to get involved. 
• Look for shares to consolidate into the week, then move higher from next week.

After a lackluster second half to 2023, shares of The Trade Desk, Inc. NASDAQ: TTD are once again doing what they love best: rallying. Truth be told, it was starting to look like they were forming a downtrend, having fallen more than 30% from last summer’s peak into January. But with equities, in general, enjoying the return of a risk-on sentiment in a significant way, it was too much for The Trade Desk’s bears. 

Shares of the tech giant had already jumped 20% higher prior to the company’s Q4 report last week, and since, they’ve gone even higher. With all the major indices now printing record highs once more, it’s as good a time as any to be getting involved in rising stars. Here are 3 reasons to get excited about The Trade Desk in particular. 

Strong outlook

First off, let’s jump into last week’s earnings report. It caught analysts by surprise in the best possible way, with the company’s revenue coming in well ahead of the consensus and showing year-on-year growth of more than 23%. Not only was it a stronger quarter than expected, but management’s forward guidance was also better than expected, which is arguably more important. Against a consensus estimate for revenue of $452 million this quarter, The Trade Desk is now forecasting at least $478 million. 

Beyond the headline numbers, further bullish momentum was found from the fact it was the company’s highest-ever revenue print and the third quarter in a row that it’s risen. At $0.20, it was also The Trade Desk’s highest-ever earnings per share print. Unsurprisingly, shares jumped as much as another 20% the following day off the back of such performance. And though they’ve softened a little since then, they’re still well up on their pre-earnings levels and looking good to keep moving higher. 

Bullish comments

Another reason to consider building a position ahead of further gains is the increasingly bullish outlook from the analysts. While a business will always try to put the best spin on its own performance, analysts aren’t afraid to call it as they see it. So when the team at Citi called last week’s report a “blast” versus the previous quarter’s “bloop,” you can be sure they meant it. Those comments were part of their note to clients where they reiterated their Buy rating on The Trade Desk shares, along with their street-high price target of $110. From where shares were trading on Thursday, that was pointing to at least another 35% in targeted gains. 

Citi wasn’t alone either. BMO analyst Brian Pitz called it a “mic drop” report that will “silence the bears,” and he sees The Trade Desk as being particularly well positioned to capitalize on key digital ad trends emerging this year. Similarly, the teams at Morgan Stanley and Needham & Company made bullish comments and stances. 

Technically attractive

The final reason to get excited here is the technical setup. Having trended down for so many months last year, The Trade Desk still has a ton of room to head north before anyone could say its shares are starting to get frothy. While last week’s initial pop might have sent the stock’s relative strength index above 70, indicating overbought conditions, the subsequent softening brought it back. 

And with yesterday’s gains already being added to during Thursday’s session, investors getting involved now can do so with the feeling that they’re getting a bit of a bargain. Last week’s jump showed just how quickly the current rally could gain further momentum, and with the stars aligning across all parts of the business, we expect this to play out in the coming weeks.