TOST: U S Restaurant Market Share Gains Will Drive Sustained Upside Momentum

Analysts have revised their average price target for Toast downward by several dollars. The new expectations are now in the mid-$40s range, with analysts citing strong recent performance as well as increased caution over macro uncertainty and future earnings outlooks.

Analyst Commentary

Recent commentary on Toast highlights a mix of positive outlooks and ongoing concerns from the analyst community. While strong performance and innovation have led to renewed optimism in certain areas, recent price target reductions and macroeconomic caution temper the near-term outlook.

• Bullish analysts see continued strength in Toast’s core U.S. restaurant business, supported by robust annual recurring revenue growth and resilient restaurant margins.
• Coverage initiations point to sustained growth rates above 20 percent, with optimism that Toast’s pricing power in fintech can further enhance its profitability and margins.
• Growth catalysts identified include further market share gains in the U.S. small and medium-sized business sector and expansion opportunities in enterprise, food and beverage retail, and international markets.
• Certain analysts believe Toast is well-positioned to benefit from a combination of fintech pricing and the cross-selling of additional software-as-a-service offerings in the future.

• Bearish analysts cite recent price target reductions as reflecting macroeconomic risk, uncertainty in future guidance, and more cautious multi-year outlooks, particularly regarding potential softness in upcoming quarters.
• Concerns remain over the sustainability of current consumer spending, with risks of tougher quarterly comparisons ahead due to strong prior year holiday results.
• Recent observations of pricing changes to Toast’s starter kit have raised questions about competitive pressures and the impact of price adjustments on future revenue growth.
• While performance has been strong, some expect the environment to remain challenging, encouraging investors to be selective when considering payment and fintech sector exposure.

What's in the News

• Toast announced a nationwide agreement with everbowl, a Southern California-based craft superfood chain, to implement the Toast platform, including Toast POS, Toast Go handhelds, and partner ecosystem integrations across over 100 locations. (Client Announcements)
• TGI Fridays will deploy Toast technology across all U.S. locations, leveraging Toast's POS platform, Multi-Location Management, Mobile Order & Pay, and Kitchen Display Systems, with additional offerings available over time. (Client Announcements)
• The company has partnered with Uber Technologies on a multi-year, global initiative to develop innovative tools for restaurant operators, beginning in the U.S. and Canada and expanding internationally, with Uber becoming Toast's preferred food delivery marketplace. (Client Announcements)
• Toast expanded its platform with the Toast IQ conversational AI assistant, purpose-built for hospitality, enabling real-time insights, proactive recommendations, and allowing operators to take actions directly within Toast from a single interface. (Product-Related Announcements)
• Completed a share buyback tranche, repurchasing 575,000 shares for $23.09 million between July and September 2025, totaling 3,870,000 shares repurchased for $109.72 million under the current program. (Buyback Tranche Update)

Valuation Changes

• Fair Value Estimate: Remained stable at approximately $47.35 per share.
• Discount Rate: Increased slightly from 7.31% to 7.33%.
• Revenue Growth: Held steady at around 18.07% year-over-year.
• Net Profit Margin: Unchanged, maintaining a level just above 8%.
• Future P/E Ratio: Declined modestly from 49.12x to 47.34x, indicating a slightly lower growth multiple on future earnings.