Shares of several advertising technology, or "adtech," companies are under pressure on Wednesday morning after The Wall Street Journal reported that Google (GOOGL) is planning to curtail cross-app tracking on Android phones, following a similar move by Apple (AAPL). Commenting on the news, Oppenheimer analyst Timothy Horan said that while the "initial reaction is gut-wrenching caution for all adtech names," the reported changes "will only further bifurcate the sector into the haves and have-nots," adding a stock that he sees being "firmly in the winning category".

CROSS-APP TRACKING CHANGES: Google plans to adopt new privacy restrictions to curtail tracking across apps on Android smartphones, following Apple in putting restraints on an advertising industry that has covertly collected data across billions of mobile devices, The Wall Street Journal's Tripp Mickle, Sam Schechner and Patience Haggin reported. Google's plans for Android could hasten an end to more than a decade of advertising practices across smartphones in which companies including Meta Platforms' (FB) Facebook layered their code into hundreds of thousands of apps to track consumer behavior, the authors noted.

Google said Wednesday that it plans to develop more privacy-focused replacements for the alphanumeric identifiers associated with individual smartphones that some apps use to gather and share information about users. The Alphabet unit said it plans to keep supporting current smartphone identifiers for at least the next two years and to give the industry substantial notice before any changes. It said it plans to work with the industry to develop the replacements, the authors wrote.

“We don’t think there should be a forced choice between privacy and developers building their business,” said Anthony Chavez, vice president, product management for Android security and privacy.

DIGITAL TURBINE ACCESS 'MORE VALUABLE': Commenting on The Wall Street Journal's report, Oppenheimer analyst Timothy Horan said the "initial reaction is gut-wrenching caution for all adtech names." However, he noted that the report said Google will wait "at least the next two years" and he believes that these reported changes "will only further bifurcate the sector into the haves and have-nots." Digital Turbine (APPS) is "firmly in the winning category" as its unique access on 1.6B smartphones' firmware/software will become more valuable and hasten the urgency for larger impacted players to tap into Digital Turbine's "superior proprietary" data and products, said Horan, who echoes his prior view that the company appears to be a beneficiary to the pressures facing some other ad companies.

The company's unique ad-tech ecosystem provides superior distribution and data insights for app developers, he argued, adding that the underlying power of this "unique handset platform is underappreciated," making Digital Turbine his top pick. Horan kept an Outperform rating and $117 price target on Digital Turbine shares.

PRICE ACTION: In Wednesday morning trading, shares of Digital Turbine have dropped over 12% to $48.78. Meanwhile, Trade Desk (TTD), which also reported on its Q4 results this morning, has slid more than 7%. Also lower, shares of Magnite (MGNI) have slipped about 8% to $12.82.