The investors in The Trade Desk, Inc.'s (NASDAQ:TTD) will be rubbing their hands together with glee today, after the share price leapt 48% to US$74.24 in the week following its quarterly results. Revenues of US$377m beat expectations by a respectable 3.2%, although statutory losses per share increased. Trade Desk lost US$0.04, which was 148% more than what the analysts had included in their models. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Trade Desk from 18 analysts is for revenues of US$1.58b in 2022 which, if met, would be a notable 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to surge 50% to US$0.10. In the lead-up to this report, the analysts had been modelling revenues of US$1.58b and earnings per share (EPS) of US$0.10 in 2022. So the consensus seems to have become somewhat more optimistic on Trade Desk's earnings potential following these results.
The consensus price target rose 9.4% to US$78.93, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Trade Desk, with the most bullish analyst valuing it at US$100.00 and the most bearish at US$48.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2022 brings more of the same, according to the analysts, with revenue forecast to display 29% growth on an annualised basis. That is in line with its 31% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 13% per year. So although Trade Desk is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Trade Desk following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Trade Desk going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Trade Desk that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.