Toast stock price target raised to $42 at DA Davidson

On Friday, Toast Inc. (NYSE:TOST) saw its price target increased by DA Davidson from $38.00 to $42.00, while the firm retained a Neutral stance on the company’s shares. The adjustment follows Toast’s release of its fourth-quarter earnings, which surpassed DA Davidson’s expectations in terms of total revenue and adjusted EBITDA. With a market capitalization of $23 billion and analyst targets ranging from $27 to $50, Toast has garnered significant attention from Wall Street. According to InvestingPro data, 5 analysts have recently revised their earnings expectations upward for the upcoming period.

Toast, a company specializing in restaurant software, outperformed DA Davidson’s revenue forecast by 2% and its adjusted EBITDA prediction by 16%. In response to these results, DA Davidson analyst Peter Heckmann adjusted the company’s EBITDA forecasts upwards by an average of 5%. The company has demonstrated robust growth, with revenue increasing by 28.33% over the last twelve months. InvestingPro analysis reveals over 10 additional key insights about Toast’s performance and potential, available exclusively to subscribers.

Moreover, Toast presented its first outlook for 2025, projecting a year-over-year growth of 23%-25% in Non-GAAP FinTech & Subscription gross profit, reaching between $1,745 million and $1,765 million. Additionally, the company anticipates a significant increase in adjusted EBITDA, with a growth rate of 37%-42%, which would translate to $510 million to $530 million.

Heckmann’s statement acknowledged the positive performance, noting, "Following the update, we are raising our adjusted EBITDA forecasts by an average of 5% each. We are maintaining our NEUTRAL rating on Toast, but raising our price target to $42 (from $38)."

The revised price target reflects the company’s solid fourth-quarter performance and its promising financial outlook for the coming years. Despite the increased target, DA Davidson maintains a neutral position on the stock, indicating a cautious stance on Toast’s future market performance.

In other recent news, Toast Inc. has reported strong fourth-quarter earnings, prompting several financial firms to adjust their outlook on the company. Mizuho (NYSE:MFG) Securities increased its price target for Toast from $40 to $45, maintaining an Outperform rating, citing the company’s robust financial performance and optimistic forecast for 2025. Similarly, RBC Capital Markets also raised its price target to $45, reflecting Toast’s promising expansion into new markets and a partnership with Hilton for payment solutions. RBC Capital revised its revenue and adjusted EBITDA estimates for 2025 to $6.12 billion and $516 million, respectively.

Compass Point, however, adjusted its price target for Toast slightly downward to $47 from $49, while maintaining a Buy rating. Despite the reduced target, Compass Point remains optimistic about Toast’s potential to outperform its current fiscal guidance. Meanwhile, Keefe, Bruyette & Woods increased their price target to $42, maintaining a Market Perform rating, following an upward revision of Toast’s EPS estimates for 2025 and 2026. The firm noted better-than-expected outcomes from fintech pricing adjustments and subscription revenue conversion.

Toast’s international expansion is reportedly on track, with plans to reach 10,000 locations by the end of 2025. Analysts have highlighted the company’s balance between investment and margin expansion, with positive impacts anticipated from strategic moves and financial guidance. Despite some tempered forecasts, Toast’s management continues to focus on strategic investments and mitigating risks, contributing to the company’s growth trajectory.

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