Wells Fargo has given Toast’s restaurant software stock a double upgrade. Analyst Andrew Bauch raised the rating to overweight from underweight. He also increased his price target to $39 from $30.
Bauch believes Toast’s valuation does not fully appreciate its growth opportunities. These include enterprise, international, and food and beverage retail. He also noted Toast’s defensiveness should stand out amid macro volatility.
Toast has shown impressive market share gains over the past five years. Bauch expects this trend to continue. He sees a reasonable path to over 5% gross profit upside in 2026 and 2027.
Despite the upgrade, Toast shares were down more than 1%. However, the stock has risen nearly 19% over the past six months. In comparison, the S&P 500 has dropped more than 5% during the same period.
Analysts remain divided on the stock. Out of the 29 who cover it, 13 have a buy or strong buy rating. The remaining 16 have a hold or underperform rating on the shares.
Toast’s stock has dropped 30% since November 2024.
Toast stock gets significant upgrade
This presents a buying opportunity despite recession fears.
The company has significantly improved its margins over the years. It is now both free cash flow and GAAP net profitable. Thanks to their strong balance sheet, even a recession will not be an existential threat.
They might come out of it strong. When the market goes into sell-off mode, it is exactly the time to take advantage of cheaper prices for good companies. Throughout the last three months, 14 analysts have evaluated Toast.
They have offered a spectrum of opinions ranging from bullish to bearish. The average price target is currently $42.50. The high is $50.00 and the low is $29.00.
This represents a 3.46% increase from the previous average of $41.08. Toast is a US-based restaurant technology company. It serves 134,000 restaurant locations across the United States as of December 2024.
In 2024, Toast processed roughly $159 billion in gross platform volume. Toast’s offerings include point-of-sale systems, inventory and payroll management, delivery integration, e-commerce ordering, reservation management, and loyalty programs. The company’s market capitalization is below industry averages.
However, it has shown significant revenue growth as of December 2024, outperforming peers in the financials sector.
Noah Nguyen is a multi-talented developer who brings a unique perspective to his craft. Initially a creative writing professor, he turned to Dev work for the ability to work remotely. He now lives in Seattle, spending time hiking and drinking craft beer with his fiancee.
