Netflix and Trade Desk stocks retain Overweight ratings, targets unchanged

Netflix and Trade Desk stocks retain Overweight ratings, targets unchanged
Credit: © Reuters.

On Friday, KeyBanc Capital Markets maintained its optimistic stance on both Netflix, Inc. (NASDAQ: NFLX ) and The Trade Desk Inc . (NASDAQ: TTD ), reiterating an Overweight rating for both companies. Netflix's price target remains set at $705.00, and The Trade Desk's target is held steady at $100.00.

The reaffirmation of these ratings follows a meeting with Netflix's leadership, which left KeyBanc's analyst confident in the streaming giant's advertising technology (AdTech) strategy. Netflix is focusing on in-house AdTech development, emphasizing personalization and advertising format innovation. Additionally, the company plans to employ a hybrid sales strategy that incorporates third-party demand-side platforms (DSPs) to manage ad inventory.

Netflix's strategy is based on the expectation that connected TV (CTV) will demonstrate its effectiveness as an advertising medium and, over the next two to three years, will attract a larger share of the advertising dollars currently spent on traditional linear television. This potential shift could benefit both Netflix and The Trade Desk, given their respective roles in the streaming and digital advertising markets.

The Trade Desk, specializing in programmatic advertising, stands to gain as connected TV advertising becomes more prevalent, complementing Netflix's efforts to innovate in this space. The collaboration between Netflix's in-house technology and third-party platforms like The Trade Desk is indicative of the broader trend towards more sophisticated and targeted advertising in the streaming industry.

KeyBanc's reaffirmed ratings and price targets reflect an anticipation that both Netflix and The Trade Desk are well-positioned to capitalize on the evolving AdTech landscape, particularly in the connected TV sector. The analyst's comments underscore a belief in the companies' strategies and their potential to disrupt traditional TV advertising models.

InvestingPro Insights

As Netflix continues to navigate the competitive landscape of streaming and advertising technology, recent data from InvestingPro underscores the company's financial metrics and market position. With a market capitalization of $263.07 billion and a P/E ratio of 41.62, Netflix is trading at a valuation that reflects its growth potential, especially considering its revenue growth of 9.47% over the last twelve months as of Q1 2024. Moreover, the company's gross profit margin stands at a healthy 43.06%, indicating efficient operations and a strong ability to monetize its content.

InvestingPro Tips highlight that 25 analysts have revised their earnings upwards for the upcoming period, suggesting a positive outlook on Netflix's performance. Additionally, the company's shares are trading near their 52-week high, with a price 95.54% of this peak, reflecting investor confidence in its strategy and market presence. For readers interested in a deeper dive into Netflix's financial health and strategic positioning, InvestingPro offers additional tips and metrics. Discover more about how Netflix is expected to perform and make informed investment decisions with a subscription to InvestingPro. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, where 16 more InvestingPro Tips are available for Netflix.

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