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Trade Desk a Buy at Truist on Risk-Reward Balance

Truist sees an 'attractive risk-reward' balance after Trade Desk's stock tumbles.

Trade Desk  (TTD) - Get Report was upgraded to buy from hold by a Truist analyst after the ad-technology company reported stronger-than-expected first-quarter earnings and the stock dropped.

Shares of the Ventura, Calif., company at last check were down 3.8% to $471 following a 26% drop in Monday trading.

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Analyst Youssef Squali cut his price target on Trade Desk 30% to $620 from $880. The analyst said in an investors note that he saw an "attractive risk-reward" balance after the stock pullback.

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The ad-buying-services provider reported that Q1 revenue leaped 37% from a year earlier to $219.8 million, beating the FactSet analyst consensus of $216.9 million.

Adjusted earnings per share climbed to $1.41 from 90 cents, besting the analyst estimate of 80 cents.

In addition, Trade Desk predicted second-quarter revenue of between $259 million and $262 million, topping the analyst forecast of $253 million.

Squali noted that while Trade Desk's second-quarter guidance was above consensus, "it failed to impress."

"[Visibility] beyond [the third quarter] is somewhat clouded by the variability in the expected contribution to [the fourth quarter] of new initiatives like (connected TV) internationally, Solimar and Walmart,"  (WMT) - Get Report Squali said.

But "the [long-term] thesis around TTD being a primary beneficiary of secular growth in programmatic, in [connected TV] and an alternative to the walled gardens remains intact."

During a conference call with analysts, company Founder and Chief Executive Jeff Green said "CTV continues to lead our growth and our international expansion continues to yield very encouraging results."

Solimar is Trade Desk's new platform, which Green said the company is preparing to launch in the summer.

In January Walmart said it was renaming its ads business "Walmart Connect" and announced a new offering through Trade Desk.

Last month, Trade Desk and Publicis  (PUBGY)  said they were collaborating on ways to target ads without using third-party cookies.

In February, Trade Desk beat Wall Street's fourth-quarter estimates.

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