Shares of advertising software maker The Trade Desk (NASDAQ:TTD) jumped 5.41% in the morning session after Morgan Stanley upgraded its rating on the stock from Equal Weight (Hold) to Overweight (Buy). Morgan Stanley analyst Matthew Cost called the company "best-in-class" in ad tech and said that it is poised to benefit from Connected TV (CTV) growth as well as stabilization in ad markets. Cost has a $90 price target on the stock with a $190 bull case price target. After the initial pop the shares cooled down to $74.67, up 1.94% from previous close.
What is the market telling us:
The Trade Desk's shares are very volatile and over the last year have had 38 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was about one month ago, when the company gained 5.67% on the news that competitor Meta reported impressive first-quarter results that surpassed analysts' daily active users (DAU), revenue, operating profit, earnings per share (EPS), and free cash flow expectations. Sales climbed in the first three months of the year, snapping a cycle of three straight quarters of revenue drops. Additionally, advertising revenue surpassed Consensus expectations, which was a positive read-through for the current state of the digital ad market. The Trade Desk, which is a programmatic platform enabling digital ad placement, is one of the potential beneficiaries.
The Trade Desk is up 69.6% since the beginning of the year, and at $74.67 per share it is trading close to its 52-week high of $75.41 from August 2022. Investors who bought $1,000 worth of The Trade Desk's shares 5 years ago would now be looking at an investment worth $8,970.
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