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Investing.com - RBC Capital has raised its price target on Toast Inc. (NYSE:TOST) to $50.00 from $45.00 while maintaining a Sector Perform rating on the stock. According to InvestingPro data, the stock currently trades at $46.31, with analyst targets ranging from $36 to $60.
The price target increase follows Toast’s recent quarterly results, which exceeded both RBC Capital’s expectations and consensus Street estimates. The company also reported strong annual recurring revenue (ARR) growth and record net location additions, contributing to impressive revenue growth of 26% year-over-year and a remarkable 97% stock price return over the past year.
Toast has increased its fiscal year 2025 guidance, reflecting continued confidence in its business performance. The company is experiencing momentum in both its core small and medium-sized business (SMB) market and expansion markets. InvestingPro analysis reveals 12 additional key insights about Toast’s performance and valuation metrics, available to subscribers.
RBC Capital noted several challenges for the second half of 2025, including increased expenses from tariffs, higher growth investments, and moderating Subscription gross profit growth as it laps its heightened Software (ETR:SOWGn) as a Service (SaaS) ARR conversion. These factors create headwinds for margin expansion.
Despite these challenges, RBC Capital views Toast’s adjusted EBITDA margin expansion story as "intact and compelling," citing the company’s continued go-to-market momentum and strength in ARR growth.
In other recent news, Toast Inc. reported its second-quarter earnings, revealing a mixed performance. The company exceeded revenue expectations with $1.55 billion, surpassing the forecast of $1.52 billion. However, Toast’s earnings per share (EPS) fell short at $0.13, compared to the expected $0.22, marking a 40.91% negative surprise. Despite this, Toast demonstrated strong growth in its core U.S. restaurant segment, adding a record 8,500 new locations. JPMorgan raised its price target for Toast to $52, while Needham increased its target to $60, citing the company’s strong quarterly performance. Goldman Sachs maintained a Neutral rating with a $51 price target, noting potential understatement of performance due to earlier disruptions. Toast also provided above-consensus guidance for the third quarter and raised its full-year 2025 outlook. These developments reflect Toast’s ongoing market share gains and robust performance in its software and payments segments.
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