Key points
- Stocks rose following last week’s blowout report.
- Analysts are pointing to the 2021 all-time high as the next stop, but there’s still time to get involved.
- Look for stocks to consolidate during the week, then move higher from next week.
- 5 stocks we like best from Trade Desk
After a lackluster second half through 2023, shares of The Trade Desk, Inc. NASDAQ:TTD they are once again doing what they love most: rallying. In fact, it was starting to look like they were forming a downtrend, having fallen more than 30% from last summer’s peak through January. But with stocks, in general, enjoying the return of risk-on sentiment significantly, it was too much for the bears on The Trade Desk.
Shares of the tech giant had already risen 20% before the company’s fourth-quarter report last week and have risen even more since then. With all major indices now once again recording record levels, it is the best time to take an interest in rising stars. Here are 3 reasons to get excited about The Trade Desk in particular.
Strong perspective
First of all, let’s turn to last week’s earnings report. It caught analysts by surprise in the best way possible, with the company’s revenues comfortably beating consensus and showing year-over-year growth of more than 23%. Not only was it a stronger-than-expected quarter, but management’s forward guidance was better than expected, which is arguably more important. Against a consensus estimate for revenue of $452 million this quarter, The Trade Desk now expects at least $478 million.
Beyond the headline numbers, further bullish momentum was found in the fact that it was the company’s highest revenue ever and the third consecutive quarter in which it increased. At $0.20, it was also The Trade Desk’s highest earnings per share ever. Not surprisingly, shares jumped another 20% the next day on the back of that performance. And while they’ve softened a bit since then, they’re still well above pre-earnings levels and appear capable of continuing to move higher.
Bullish comments
Another reason to consider building a position for further gains is the increasingly bullish outlook from analysts. While a company will always try to push its performance to the max, analysts aren’t afraid to call it what they see it. So when the Citi team called last week’s report a “blowout” compared to the previous quarter’s “bloop,” you can be sure they meant just that. Those comments were part of the note to clients reiterating their Buy rating on The Trade Desk shares, along with their $110 high price target. From where the shares traded on Thursday, that indicated at least another 35% of targeted earnings.
Citi wasn’t alone either. BMO analyst Brian Pitz called it a “mic drop” report that will “silence the bears” and believes The Trade Desk is particularly well positioned to capitalize on major digital advertising trends emerging this year. Likewise, teams at Morgan Stanley and Needham & Company expressed bullish comments and stances.
Technically attractive
The final reason to get excited here is the technical setup. After trending down for so many months last year, The Trade Desk still has plenty of room to head north before anyone can say its stock is starting to get frothy. While last week’s initial rally could have taken the stock’s relative strength index above 70, indicating overbought conditions, subsequent weakening has brought it back.
And with yesterday’s gains already added during Thursday’s session, investors who get involved now can do so while feeling like they’re getting a small bargain. Last week’s jump demonstrated how quickly the current rally could gain further momentum, and with the stars aligned across all sectors of the business, we expect this to play out in the coming weeks.
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