DA Davidson holds Toast stock at $38 with Neutral rating

On Wednesday, DA Davidson maintained a Neutral stance on Toast Inc. (NYSE: NYSE:TOST) shares, with a consistent price target of $38.00. According to InvestingPro data, the stock is currently trading at $40.03, having delivered an impressive 86.93% return over the past year. Peter Heckmann, an analyst at the firm, provided insights into the company’s financial outlook, focusing on the anticipated growth in Non-GAAP FinTech & Subscription gross profit and adjusted EBITDA for the year 2025.

Heckmann projects a 25% year-over-year increase in Non-GAAP FinTech & Subscription gross profit, reaching $1,756 million, which is slightly below the consensus estimate of $1,774 million. Additionally, he anticipates a 37% year-over-year rise in adjusted EBITDA for 2025, amounting to $491 million, compared to the consensus of $507 million.

The forecasts by DA Davidson take into account only a modest contribution from the Fintech payment processing pricing increases that began in September 2024. Moreover, the projections include minimal impact from restaurant customers adopting surcharging practices.

Heckmann’s analysis leads to the continuation of the Neutral rating for Toast shares. The $38 price target is based on an enterprise value that is 31-32 times DA Davidson’s 2026 adjusted EBITDA forecast of $671 million for Toast Inc.

Toast Inc., a company that serves the restaurant industry with its payment processing and point-of-sale systems, is navigating through an evolving market landscape. The financial forecasts and maintained stock rating by DA Davidson reflect the firm’s measured expectations for the company’s performance in the coming years. InvestingPro analysis suggests the stock is trading above its Fair Value, despite maintaining a healthy current ratio of 2.41. Discover more insights and 8 additional ProTips for Toast Inc. with an InvestingPro subscription, including detailed analysis of the company’s financial health and growth prospects.

In other recent news, Toast Inc. has announced the appointment of Gail Miller as its new Chief Accounting Officer, effective March 3, 2025. Miller, who previously served in similar roles at Remitly Global and Shift4 Payments, will receive a base salary of $400,000, a $100,000 sign-on bonus, and stock options subject to a four-year vesting schedule. In analyst updates, DA Davidson has maintained a Neutral rating on Toast with a $38 price target ahead of the company’s fourth-quarter earnings report. The firm expects Toast to meet or slightly surpass earnings forecasts but expressed concerns about potentially conservative guidance for 2025.

Meanwhile, Oppenheimer initiated coverage of Toast with an Outperform rating and a $46 price target, citing the company’s growth potential in the restaurant industry’s shift to integrated software solutions. BMO Capital Markets also began coverage with an Outperform rating and a $45 price target, highlighting Toast’s comprehensive product suite and promising unit economics. Additionally, an RBC analyst noted that the optimistic outlook among small and medium-sized businesses could benefit Toast through increased technology investments and subscription revenue growth. These developments reflect the ongoing interest and analysis surrounding Toast’s market position and future performance.

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