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Investing.com - Freedom Capital Markets initiated coverage of Toast Inc. (NYSE:TOST) with a Buy rating and a $45.00 price target on Wednesday. The stock, currently trading at $37.22, has shown strong momentum with a 31.5% return over the past year. According to InvestingPro data, the company’s current market capitalization stands at $22 billion.
The research firm cited Toast’s successful penetration of the U.S. restaurant market with its cloud-based point-of-sale system, noting the company has captured approximately 15% of U.S. restaurant locations since 2011.
Freedom Capital Markets identified multiple growth catalysts for Toast , including additional market share gains in its core U.S. small and medium-sized business segment and significant total addressable market expansion opportunities in enterprise, food and beverage retail, and international segments.
The firm expects these catalysts to drive sustained growth in key performance indicators, specifically net new locations and annualized recurring revenue, potentially exceeding management’s medium-term targets outlined at its May 2024 Investor Day.
The $45 price target is based on 32 times Freedom Capital Markets’ estimated 2026 EBITDA of $795 million, or alternatively 35 times estimated 2026 free cash flow of $720 million.
In other recent news, Toast Inc. has seen a flurry of activity surrounding its stock price targets and market performance. Truist Securities raised its price target for Toast to $51, citing a strong second-quarter earnings report and expectations for faster recurring gross profit growth, despite some near-term margin adjustments. Bernstein SocGen Group also increased its price target to $48, highlighting Toast’s impressive second-quarter performance and the addition of 8,500 new locations, bringing the total to 148,000. RBC Capital followed suit by raising its price target to $50, noting that Toast’s quarterly results exceeded their expectations and consensus Street estimates, with strong annual recurring revenue growth and record net location additions.
Meanwhile, Evercore ISI maintained its In Line rating and $40 price target, pointing out pricing pressure in the lower-end market segments, such as casual dining and quick-service restaurants. Baird also maintained its Neutral rating and a $48 price target, observing that Toast’s starter kits seem to target smaller restaurants operating below the company’s core customer base. These developments reflect a diverse range of analyst perspectives on Toast’s current market position and future growth potential.
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