UBS maintains Buy rating, $47 target on Toast stock

On Friday, UBS analyst Tim Chiodo confirmed the continuation of a Buy rating and a $47.00 price target for Toast Inc. (NYSE:TOST), a cloud-based restaurant software company. The stock, currently trading at $35.08, has demonstrated strong momentum with a 47% gain over the past year. According to InvestingPro data, analyst targets for Toast range from $26.50 to $60.00, reflecting diverse views on the company’s potential. Chiodo’s assessment follows Toast Inc.’s anticipation of surpassing approximately 10,000 growth market locations by sometime in 2025. These growth markets include International, Food & Beverage (F&B) retail, and Enterprise locations, as defined by Toast.

In his analysis, Chiodo provided a detailed framework for evaluating the core U.S. restaurant business, excluding Enterprise locations in the U.S. but incorporating them in a separate calculation. He offered an illustrative guide to gauge the size of the U.S. market and the potential for Toast to win new locations annually. The analysis also includes estimates for International, F&B retail, and Enterprise locations, taking into account the penetration of each individual total addressable market (TAM).

The UBS analyst’s report suggests that the projections for net new location additions by Toast in the medium term are realistic. This implies that Toast would need to capture about 35-37% of new restaurant cloud Point of Sale (POS) locations in the U.S. for the years 2025 to 2030. Eight analysts have recently revised their earnings estimates upward, suggesting growing confidence in Toast’s business model. Discover more insights about Toast’s growth potential in the comprehensive Pro Research Report, available exclusively on InvestingPro. This is in comparison to the lower to mid-30% range Toast has achieved more recently. Chiodo’s analysis also considers the expected contributions from growth outside the U.S., within the F&B retail sector, and from Enterprise locations, which would reduce the need for Toast to gain a larger share of the core U.S. restaurant market.

Chiodo’s comprehensive market sizing analysis is available in Excel format upon request. This detailed approach underscores UBS’s confidence in Toast’s capacity to meet its growth targets in the coming years, as it expands its presence across various market segments both domestically and internationally. The company maintains a healthy financial position with a current ratio of 2.44, indicating strong liquidity to support its expansion plans. For deeper analysis of Toast’s growth metrics and valuation, explore the full suite of financial tools available on InvestingPro.

In other recent news, Toast Inc. reported fourth-quarter earnings that exceeded analysts’ expectations, with total revenue surpassing projections by 2% and adjusted EBITDA by 16%. DA Davidson responded to these results by raising Toast’s price target from $38 to $42, although the firm maintained a Neutral rating on the stock. Toast also provided an optimistic outlook for 2025, forecasting a 23%-25% year-over-year growth in Non-GAAP FinTech & Subscription gross profit and a 37%-42% increase in adjusted EBITDA. Piper Sandler reiterated a Neutral rating with a $35 price target, noting Toast’s nearly 40% growth in subscription and financial products gross profit in 2024 and plans for international expansion in 2025. Meanwhile, Mizuho (NYSE:MFG) Securities raised its price target for Toast from $40 to $45, maintaining an Outperform rating due to the company’s robust earnings and positive growth initiatives. Mizuho’s analysis emphasized Toast’s focus on international and retail expansion, as well as strong performance in its FinTech segment. These developments suggest that Toast is poised for continued growth, despite varied analyst ratings.

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