Piper Sandler raises Toast stock price target to $37

On Friday, Piper Sandler adjusted its financial outlook for Toast Inc. (NYSE: NYSE:TOST), increasing the price target from $35.00 to $37.00 while maintaining a Neutral stock rating. Currently trading at $42.01, Toast’s stock has delivered a 36.7% return over the past year. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with analyst targets ranging from $26.40 to $50.00. The revision comes as Toast Inc. has upgraded its FY25 EBITDA margin forecast early in the fiscal year, now expecting a year-over-year expansion of 450 basis points, a significant increase from the 330 basis points projected last quarter.

Toast Inc.’s updated margin guidance suggests an anticipated full-year 2025 EBITDA growth of 47% year-over-year, with margins around 31%. This performance exceeds the lower end of the company’s medium-term target range of 30-35%. The company’s current EBITDA stands at $184 million, with a gross profit margin of 24.7%. InvestingPro data shows revenue growing at 26.7% year-over-year, reaching $5.2 billion in the last twelve months. The improved outlook is particularly noteworthy considering Toast’s ongoing investments in expanding its international presence, grocery sector, and enterprise solutions.

The company’s recent success in securing enterprise clients has been a key factor in the revised price target. Toast Inc. has added notable names such as Topgolf and Applebee’s to its roster in the first quarter, demonstrating its ability to cater not just to small and mid-sized businesses but also to large enterprises. These wins affirm the potential for Toast to leverage its multi-product offerings in the enterprise market segment.

Piper Sandler’s decision to raise the price target is based on these higher profitability estimates. The firm’s analysis suggests that Toast shares are appropriately priced when considering the company’s expected compound annual growth rate (CAGR) of 20% through the end of the calendar year 2029, coupled with an accelerated timeline for achieving profitability targets. InvestingPro analysis reveals a strong financial health score of 2.75 (GOOD), with 8 additional ProTips available to subscribers. For deeper insights into Toast’s valuation and growth prospects, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. The updated financial metrics and client acquisitions position Toast Inc. favorably in the eyes of Piper Sandler, as reflected in the new price target.

In other recent news, Toast Inc. reported its first-quarter 2025 earnings, revealing that earnings per share (EPS) of $0.09 fell short of the forecasted $0.18, and revenue slightly missed expectations at $1.34 billion against a $1.35 billion forecast. Despite the earnings miss, Toast’s stock saw an 8.32% increase in after-hours trading, possibly due to strong growth in key business areas and positive forward guidance. Toast raised its full-year outlook, projecting significant growth in FinTech and subscription gross profit. The company expanded its customer base to approximately 140,000 locations, marking a 25% increase from the previous year, with Gross Payment Volume (GPV) rising 22% to $42 billion.

Analyst firms have also weighed in on Toast’s performance. Keefe, Bruyette & Woods (KBW) raised the price target on Toast shares from $40 to $42, citing the company’s resilience amid macroeconomic challenges and its strong year-to-date booking trends. KBW maintained a Market Perform rating, noting the company’s effective management in securing recent enterprise-level contracts. Meanwhile, Evercore ISI increased the price target to $34, acknowledging Toast’s ability to stand out from competitors and maintaining an In Line rating due to stable performance in average revenue per user and annual recurring revenue.

Toast’s recent financial results were seen as largely positive by Evercore ISI, which highlighted Toast’s strong commentary regarding new location additions expected in the second quarter. However, they noted that with Toast’s current market valuation, there is limited tolerance for any potential earnings disappointments in the coming year. Both KBW and Evercore ISI’s assessments reflect confidence in Toast’s market position and operational strengths, despite broader economic challenges.

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