Is The Trade Desk Stock Going to $105? 1 Wall Street Analyst Thinks So

Next-generation digital advertising platform developer The Trade Desk (TTD 0.81%) is an out-of-favor stock that should be getting more investor love. That’s according to one pundit following the stock, who feels its price has 14% upside potential after being punished by the market.

A cautious price target raise

Near the end of July, analyst Justin Patterson of KeyBanc made an incremental lift to his price target on The Trade Desk. While maintaining his overweight (buy) recommendation on the ad tech company’s shares, Patterson added $5 to his target for a new level of $105 per share.

Some might consider that to be a counterintuitive move, as investor sentiment on the digital ad space isn’t particularly bullish these days. Alphabet‘s (GOOG 0.69%) (GOOGL 0.60%) recently released second-quarter results revealed that revenue growth at its bellwether online video portal YouTube was notably lower than in the first quarter — and came in under analyst expectations to boot — with a relatively weak 13% rise.

In his latest take on The Trade Desk, Patterson said that the company can still top analyst expectations despite the apparent slowdown indicated by YouTube’s performance. In his view, the specialty tech service provider can continue to post annual revenue growth in excess of 20% over the mid-term.

Long-tail potential

Investors frequently overreact to discouraging news, and to me it feels like The Trade Desk’s stock — which has dipped in recent days — is suffering collateral damage from the YouTube numbers. By the way, these numbers aren’t bad at all. Sure, they’re down from the previous quarter, but so what? Revenue is still rising at a double-digit rate, and the site remains stuffed with ads.

I feel there is still great potential in the online advertising space, which can only keep advancing as more companies discover the considerable advantages of placing spots in that medium. I fully agree with Patterson that The Trade Desk is a buy, especially now that it’s taken a hit or two to its price.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and The Trade Desk. The Motley Fool has a disclosure policy.