Wells Fargo assesses future prospects of advertising companies Magnite and The Trade Desk.

Wells Fargo takes a look into the future of advertising technology and examines the companies Magnite and The Trade Desk in a recent study. The analysts initiate their assessment of Magnite with an "Equal Weight" rating, forecasting that particularly in 2025 and 2026 Netflix could enable a revenue boost of 2% to 5% above consensus forecasts. However, the trend towards Connected TV raises uncertainty, as the associated changes in the advertising market could pressure EBITDA and impact profit margins. Among potential growth opportunities, Wells Fargo also considers possible positive effects due to the ongoing Google competition case. Another critical aspect is the need to adjust the cost structure to declining revenue potentials to be more resilient to market changes. For The Trade Desk, on the other hand, Wells Fargo envisions brighter times: An "Overweight" rating underscores this. Analysts highlight Alphabet’s regulatory troubles, new partnerships, and the significant shift of advertising budgets from Amazon to Connected TV, promising substantial growth. Additionally, the introduction of advertising on Prime Video and a rapidly growing inventory from both Roku and Netflix by 2025 and 2026 are expected to provide additional momentum. Alphabet's legal challenges are already a growth driver and could facilitate further market share gains. In contrast, NewStreet Research strikes a different tone: The rating for The Trade Desk was downgraded from "neutral" to "sell." Especially 2025 is considered a critical year, as a decline in political ad spending outside of election periods is anticipated. With a target price of $86, they see a potential risk of a price drop of over 27%.