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On Thursday, Keefe, Bruyette & Woods adjusted their outlook on Toast Inc. (NYSE: NYSE:TOST), raising the price target to $42.00 from the previous $40.00. The firm maintained a Market Perform rating on the company’s shares. The adjustment follows Toast’s fourth-quarter earnings release, which prompted the analysts to revise their estimated earnings per share (EPS) for the years 2025 and 2026. Estimates for 2025 EPS increased to $0.27 from $0.25, and for 2026 EPS to $0.55 from $0.53. According to InvestingPro data, Toast has demonstrated strong revenue growth of 28.3% in the last twelve months, with a healthy current ratio of 2.44 indicating solid liquidity.
The analysts’ decision to raise the price target reflects an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 34 times based on their adjusted EBITDA forecast for 2026. The firm’s commentary highlighted Toast’s recent quarterly performance, noting better-than-expected results stemming from fintech pricing and subscription average recurring revenue (ARR) to revenue conversion. These factors are expected to provide momentum in the first half of the next year and stabilize in the second half.
Toast’s outlook for 2025 was also more optimistic than anticipated, with the analysts pointing to a steady increase in location adds. Adjusted EBITDA margins are trending upwards, exceeding preliminary expectations. Management at Toast is credited with successfully balancing operating leverage with strategic investments in key areas of the business.
The analysts concluded that while the recent financial results were generally positive and should support the current stock valuation, they also observed that the stock’s valuation seems quite full. This suggests that while the performance metrics are solid, the market may have already priced in these positive developments. InvestingPro analysis indicates the stock is currently overvalued, with additional insights available in the comprehensive Pro Research Report, which covers what really matters for Toast and 1,400+ other top stocks.
In other recent news, Toast Inc. reported its fourth-quarter 2024 earnings, revealing a mixed financial performance. The company posted an earnings per share (EPS) of $0.05, which fell short of the forecasted $0.17. However, Toast exceeded revenue expectations, bringing in $1.34 billion against a forecast of $1.31 billion, highlighting strong sales. Analysts from Canaccord Genuity and BMO Capital Markets have raised their price targets for Toast to $48, citing the company’s growth potential and strong operational metrics. Canaccord Genuity maintained a Buy rating, emphasizing Toast’s location growth and profitability improvements, while BMO Capital Markets kept an Outperform rating, noting strong fourth-quarter trends and key performance indicators. Despite the EPS miss, Toast achieved its first full year of GAAP profitability and added a record 28,000 net locations in 2024. The company also processed $160 billion in payment volume and reported a 34% increase in recurring gross profit streams. These developments underscore Toast’s strong market position and growth potential, as noted by analysts.
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