Toast stock price target raised to $42 at KBW

On Friday, Keefe, Bruyette & Woods (KBW) updated their assessment of Toast Inc. (NYSE:TOST), a company offering a cloud-based, end-to-end technology platform for the restaurant industry. Analyst Sanjay Sakrani raised the price target on Toast Inc. shares from $40.00 to $42.00, while keeping the rating at Market Perform.

Sakrani cited the company’s resilience in the face of current macroeconomic challenges, noting stable consumer trends through early May. The strong year-to-date booking trends and the company’s ability to manage expenses contributed to a more positive outlook on the company’s financial narrative. InvestingPro data reveals impressive revenue growth of 26.72% and a healthy current ratio of 2.51, though the company maintains relatively weak gross profit margins at 24.74%.

Toast Inc.’s recent earnings report reflected a robust quarter, with continued momentum. Sakrani highlighted that despite macroeconomic uncertainty and concerns over the discretionary nature of restaurant spending, Toast’s performance showcased the sector’s durability and the company’s effective management, particularly in securing recent Enterprise-level contracts.

While the analyst expressed a favorable view of Toast’s business story and its execution, he also pointed out that the current valuation levels of Toast’s stock led to a preference for other investment opportunities in the market, hence the decision to maintain the Market Perform rating.

In summary, KBW’s updated price target reflects a slight increase in confidence in Toast Inc.’s market position and operational strengths, even as broader economic conditions present challenges for the industry.

In other recent news, Toast Inc. reported its first-quarter 2025 earnings, revealing that earnings per share (EPS) of $0.09 and revenue of $1.34 billion both fell short of analyst expectations, which were $0.18 and $1.35 billion, respectively. Despite the earnings miss, the company demonstrated strong growth in key areas, such as a 31% increase in Annual Recurring Revenue (ARR) and a 37% rise in gross profit from FinTech and subscription services. Toast’s customer base expanded to approximately 140,000 locations, marking a 25% increase from the previous year. The company also raised its full-year outlook, projecting significant growth in FinTech and subscription gross profit.

In other developments, Evercore ISI raised its price target for Toast shares to $34 while maintaining an In Line rating, acknowledging Toast’s resilience against macroeconomic pressures and strong performance in average revenue per user (ARPU) and ARR. The firm noted the importance of new location additions, which are expected to accelerate in the second quarter, contributing to the optimistic revenue outlook. However, Evercore ISI cautioned that Toast’s current market valuation leaves limited room for earnings disappointments.

Additionally, Toast has been expanding its AI capabilities and international offerings, which contributed to its positive forward guidance. The company anticipates record net location additions in the second quarter and continues to invest in AI and platform expansion to drive future growth. Despite the mixed financial performance in the first quarter, investor sentiment remained positive, as reflected in the stock’s after-hours trading surge.

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