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Investing.com - JPMorgan has raised its price target on Toast Inc. (NYSE:TOST) to $52.00 from $42.00 while maintaining a Neutral rating following the company’s strong second-quarter performance. The stock, currently trading at $47.71, has delivered an impressive 97% return over the past year according to InvestingPro data.
Toast reported better-than-expected results on recurring gross profit and EBITDA metrics, while meeting expectations for record sequential net location growth of approximately 8,500 locations, representing 23% year-over-year growth. The company, now valued at $27.57B, has maintained strong revenue growth of 26.7% over the last twelve months. Gross payment volume showed improvement with a rebound in GPV per location to -1% compared to -3% in the first quarter.
The company’s management expressed satisfaction with business momentum and plans to increase investments, particularly in scaling growth market verticals. These verticals surpassed 10,000 locations in the second quarter and are on track to achieve $100 million in annual recurring revenue by year-end. InvestingPro analysis shows Toast maintains a GREAT financial health score, with 12 additional key insights available to subscribers.
Toast continues to expand into new markets, securing wins with enterprise clients like Firehouse Subs (1,300 locations), food and beverage retail establishments such as Zabar’s, and its first location in Australia as part of international expansion efforts.
JPMorgan noted potential concerns including growth coming at higher costs and guidance indicating sequentially lower third-quarter EBITDA, contrary to typical seasonal patterns, along with more negative than expected hardware margins. Despite these concerns, the firm remains "fundamentally positive" while maintaining its Neutral rating based on relative valuation considerations.
In other recent news, Toast Inc. reported its Q2 2025 earnings, revealing a notable miss on earnings per share (EPS) while surpassing revenue expectations. The company reported an EPS of $0.13, which was below the forecasted $0.22, marking a 40.91% negative surprise. However, revenue exceeded expectations, reaching $1.55 billion compared to a forecast of $1.52 billion. Needham raised its price target for Toast to $60 from $50, maintaining a Buy rating after the company’s strong second-quarter performance. Toast also provided above-consensus guidance for the third quarter and raised its full-year 2025 outlook, adding a record 8,500 new locations during the quarter. Goldman Sachs maintained a Neutral rating on Toast with a $51 price target, noting the company’s strong performance in its software and payments segments. Goldman Sachs mentioned potential understatement of performance due to demand disruption in Toast Capital earlier in the quarter. These developments highlight Toast’s ongoing market share gains in the U.S. restaurant segment.
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