Wells Fargo Upgrades Trade Desk On 2020 Spend Inflection

Trade Desk Inc TTD guided to a gross spend of $4.24 billion for 2020, suggesting an inflection point in client spending trends, which boosts confidence in the company’s long-term opportunity, according to Wells Fargo.

The Trade Desk Analyst

Brian Fitzgerald upgraded Trade Desk from Equal-Weight to Overweight, maintaining the price target at $310.

The Trade Desk Thesis

Trade Desk reported strong fourth-quarter results and guided to a gross spend of $4.24 billion for 2020, representing 36% year-on-year growth, Fitzgerald said in the note.

Management highlighted four key growth drivers for 2020:

CTV
Momentum with large brands
Political advertising
Global expansion

While these could drive “outperformance over the course of the year,” the company’s shares have recently been under pressure due to “the broader market downdraft,” which has created “an attractive entry point,” Fitzgerald wrote.

He estimates CTV to have driven around ~7% of the fourth-quarter spend and expects key partnerships with Amazon’s AMZN Publisher Services and Comcast’s CMCSA Freewheel to enable Trade Desk to significantly increase access to CTV inventory through 2020.

The analyst added that the US presidential campaign could be a significant catalyst for the company’s outperformance in 2020. Apart from Mr. Bloomberg, candidates Sanders and Warren also appear to be using Trade Desk.