Toast stock steady as DA Davidson affirms $42 target

On Tuesday, DA Davidson maintained a Neutral rating on Toast Inc. (NYSE:TOST) with a consistent price target of $42.00, sitting within the broader analyst range of $26.40 to $60.00. The stock, currently trading at $35.01, has shown remarkable momentum with a 15.28% gain in the past week. The decision comes in light of Toast’s recent announcement of a partnership with Dine Brands Global (NYSE:DIN), Inc., the parent company of Applebee’s Neighborhood Grill + Bar. This collaboration will see the integration of Toast’s technology across Applebee’s locations throughout the United States. According to InvestingPro analysis, Toast currently trades above its Fair Value, with 11 more exclusive insights available to subscribers.

Toast, a company that offers a cloud-based, end-to-end technology platform designed specifically for the restaurant industry, has confirmed the implementation of its system in approximately 1,600 Applebee’s franchised and company-owned outlets across 16 countries by the end of 2024. With a market capitalization of $19.91 billion and impressive revenue growth of 28.33% over the last twelve months to $4.96 billion, this move represents a significant step for Toast as it demonstrates the company’s capability to scale up and cater to larger restaurant chains.

The agreement with Applebee’s is hailed as the most substantial chain partnership for Toast to date. Despite the size of this new deal, DA Davidson’s analyst pointed out that compared to Toast’s existing customer base of 134,000 locations, the addition of Applebee’s is not expected to be materially impactful. However, it serves as an important indicator of Toast’s potential for growth and expansion into servicing larger franchises. For deeper insights into Toast’s growth metrics and financial health, explore the comprehensive Pro Research Report available exclusively on InvestingPro.

DA Davidson’s reiteration of the Neutral rating suggests that while the Applebee’s deal is a positive development for Toast, it may not significantly alter the company’s financial outlook in the immediate future. The price target of $42.00 remains unchanged, indicating that the firm’s valuation of Toast’s stock is steady following the news of the Applebee’s agreement.

As Toast continues to expand its reach within the restaurant industry, the partnership with a high-profile brand like Applebee’s could potentially bolster its reputation and attract further business from similar large-scale restaurant chains. The implementation of Toast’s technology in these locations is set to commence, marking a new chapter in the company’s growth trajectory.

In other recent news, Toast Inc. has announced a significant partnership with Dine Brands Global, Inc., the parent company of Applebee’s, to implement its technology across Applebee’s locations nationwide. This agreement involves the adoption of Toast’s point-of-sale terminals and other digital solutions aimed at enhancing operational efficiency and guest experience. Meanwhile, BMO Capital Markets has adjusted its price target for Toast from $48.00 to $44.00, while maintaining an Outperform rating, citing expectations for growth in gross payment volume and subscription services revenue.

Wells Fargo (NYSE:WFC) has upgraded Toast’s stock rating from Underweight to Overweight, raising the price target from $30.00 to $39.00, reflecting confidence in Toast’s market share gains in the U.S. restaurant sector. Evercore ISI initiated coverage with an In Line rating and a $29.00 price target, acknowledging Toast’s achievements but expressing concerns about potential challenges such as tariff issues and economic conditions. UBS has maintained a Buy rating with a $47.00 price target, highlighting Toast’s potential to surpass 10,000 growth market locations by 2025.

These developments indicate varying levels of confidence among analysts regarding Toast’s growth prospects and market positioning.

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