HSBC picks TTD, APP, U as it starts coverage of U.S. digital marketing software platforms

Investment firm HSBC initiated coverage of U.S. digital marketing software platforms, noting that the $300 billion programmatic industry is forecasted to grow 13% in 2024.

The term programmatic relates to the process of how ads are bought and sold in the advertising space, referring to the automated purchase of ad-inventory in real time.

The firm expects the programmatic industry to continue growing as viewers jump ship from traditional TV to streaming, and streaming platforms shift their focus to ad-supported subscription tiers.

Stating that it prefers names in market-leading positions with solutions to increasing data privacy concerns, HSBC initiated coverage of ad tech firm Trade Desk (NASDAQ:TTD) with a Buy rating (vs. SA Quant rating of Hold) and PT of $83.20. It believes the company’s “track record for innovation” should support continued outperformance.

Brokerage initiated coverage of AppLovin (NASDAQ:APP) with a Buy rating (vs. SA Quant rating of Strong Buy) and PT of $53.20, noting that as a market leader in mobile app install advertising with a lead in AI solutions, the company is well poised to benefit from a segment recovery.

The firm initiated coverage of video game software provider Unity (NYSE:U) with a Hold rating (vs. SA Quant rating of Strong Buy) and PT of $37, stating that the company’s AdTech business is improving and its revised game engine fees should prove profitable.

HSBC believes retail media partnerships and AI solutions will help set its picks apart, due to the growing privacy concerns and the looming phase-out of third-party cookies. Brokerage sees ongoing antitrust actions against big tech firms posing an upside risk to the wider industry.