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On Tuesday, Canaccord Genuity adjusted its price target for Toast Inc. (NYSE:TOST) shares, raising it from $43.00 to $48.00, while reiterating a Buy rating on the stock. The firm’s analysts highlighted Toast’s impressive location growth as a key indicator of the company’s increasing market share. With Toast currently holding only 15% of the domestic market, Canaccord Genuity forecasts the potential for this figure to double in the foreseeable future. The company’s strong momentum is reflected in its remarkable 83.56% return over the past year, according to InvestingPro data, though current analysis suggests the stock may be slightly overvalued at these levels.
The research firm underscored Toast’s expanding opportunities in various sectors, including international markets and Food & Beverage Retail. They also noted the company’s growing enterprise mind share and the potential to cross-sell more modules to existing clients. These factors, according to Canaccord Genuity, form a solid foundation for sustained, top-tier growth.
Canaccord Genuity’s analysts pointed out Toast’s significant strides in profitability, particularly the 20-point increase in EBITDA margins in 2024. They believe that these improvements are indicative of the company’s emergence as a vertical SaaS leader, marked by a combination of growth and profits. InvestingPro analysis reveals the company maintains a healthy financial position with a current ratio of 2.44, though gross profit margins remain an area for improvement at 24.09%.
Despite Toast shares being valued at just over 9x EV/R based on normalized estimates for 2026, which is not considered inexpensive, Canaccord Genuity suggests that such valuation levels are maintainable. The analysts argue that premium prices are common for leading vertical assets in the software industry. They maintain confidence in Toast’s ability to fulfill its growth promises, which they believe should allow the stock to progress in line with its growth trajectory. With a market capitalization of $23 billion and analyst price targets ranging from $27 to $50, investors seeking deeper insights can access Toast’s comprehensive financial analysis through InvestingPro’s detailed research reports.
In other recent news, Toast Inc. reported its fourth-quarter 2024 earnings, showcasing a mixed financial performance. The company missed earnings per share (EPS) expectations, posting $0.05 against a forecast of $0.17. However, Toast surpassed revenue projections, bringing in $1.34 billion compared to the anticipated $1.31 billion. Despite the EPS miss, Toast achieved its first full year of GAAP profitability and added a record 28,000 net locations in 2024, underscoring its strong market presence. In related developments, BMO Capital Markets adjusted its outlook on Toast, raising the stock price target to $48 from $46, while maintaining an Outperform rating. This update followed Toast’s favorable fourth-quarter trends, which included growth in recurring gross profit and other key performance indicators. Analysts at BMO Capital Markets expressed confidence in the company’s strategic investments in sales, marketing, and research and development. These recent developments reflect Toast’s ongoing efforts to strengthen its position in the U.S. restaurant technology and payments market.
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