Ad companies Magnite (MGNI, Financials) and The Trade Desk (TTD, Financials) received initial coverage from Wells Fargo's research team on Tuesday.
Wells Fargo initiated Magnite with an "Equal Weight" rating. Projecting a contribution of 2% to 5% over consensus forecasts, analysts estimate that Netflix will greatly help Magnite's income in 2025 and 2026. They also predict further pressure on the company's EBITDA, however, from a change in advertising to connected TV, which might restrict profit margins.
Although Wells Fargo underlined the necessity of greater confidence in the company's capacity to change its cost structure in response to declining take rates, Magnite might gain from the continuous Google ad-tech antitrust lawsuit.
Starting with a "Overweight" rating, the Trade Desk Analysts included Alphabet's regulatory hurdles, new alliances, and Amazon's growing migration of ad expenditure to CTV as possible growth drivers. They also hope The Trade Desk gains from ad debut on Prime Video and see a significant increase in inventory from Roku and Netflix by 2025 and 2026. According to the research, Alphabet's legal problems are already helping the business to grow; additional market share increase is projected.
NewStreet Research, on the other hand, downgraded The Trade Desk to "sell" from "neutral," citing worries about 2025 especially related to the departure of political ad expenditure in a non-election year. Maintaining a price objective of $86, they indicated a possible negative side-effect of over 27%.
