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On Tuesday, Toast Inc. (NYSE: NYSE:TOST), a cloud-based restaurant software company with a market capitalization of $24.82 billion, received a steady outlook from DA Davidson, with analysts at the firm reiterating a neutral rating and a $40.00 price target. The affirmation comes after Toast reported first-quarter results that surpassed expectations in key financial metrics. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with the shares currently at $44.75, near their 52-week high.
Toast’s Non-GAAP FinTech & Subscription gross profit, which operates similarly to net revenue, was reported to be 7% higher than DA Davidson’s forecast. Additionally, the company’s adjusted EBITDA exceeded the firm’s projections by 28%. These positive outcomes prompted Toast’s management to revise their guidance upwards, increasing the midpoint of their Non-GAAP FinTech & Subscription gross profit guidance by 2% and the midpoint of the adjusted EBITDA guidance by 6%.
In response to Toast’s updated financial guidance, DA Davidson has adjusted their own forecasts upward. Despite the improved financial outlook, the firm has decided to maintain its neutral stance on the company’s stock, keeping the price target unchanged at $40.00.
The analyst from DA Davidson, Peter Heckmann, noted the company’s performance and the subsequent adjustments to their financial forecasts, stating, "Toast reported 1Q results with Non-GAAP FinTech & Subscription gross profit 7% above our forecast and adjusted EBITDA 28% above our forecast. With results, management raised the midpoint of their prior Non-GAAP FinTech & Subscription gross profit guidance range by 2% and the midpoint of the adjusted EBITDA range by 6%. Following the update, we are raising our forecasts. We are maintaining our NEUTRAL rating on Toast and our price target of $40."
Toast Inc.’s first-quarter performance and the subsequent forecast adjustments reflect the company’s current financial trajectory. The maintained neutral rating by DA Davidson suggests a cautious optimism, recognizing the company’s growth while also considering other market factors that could influence the stock’s future performance. The stock’s impressive one-week return of 21.79% and high P/E ratio of 161.72 indicate strong investor interest. For deeper insights into Toast’s valuation and growth prospects, including 13 additional key ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Toast Inc. reported its first-quarter 2025 earnings, revealing a mixed financial performance. The company’s earnings per share (EPS) of $0.09 fell short of the forecasted $0.18, and revenue slightly missed expectations with $1.34 billion against a $1.35 billion forecast. Despite this, Toast raised its full-year outlook, projecting significant growth in FinTech and subscription gross profit. Analysts have adjusted their price targets for Toast, with BMO Capital Markets raising it to $45 and maintaining an Outperform rating, citing the company’s strong execution and raised guidance. Piper Sandler increased its price target to $37, noting the upgraded EBITDA margin forecast and successful enterprise client acquisitions like Topgolf and Applebee’s. Keefe, Bruyette & Woods also raised their price target to $42, highlighting Toast’s resilience amid macroeconomic challenges. Evercore ISI adjusted its target to $34, acknowledging Toast’s stable performance despite macroeconomic pressures. These developments reflect a generally positive outlook from analysts on Toast’s growth trajectory and market position.
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