Toast (TOST): Valuation Check After BNP Paribas Exane Upgrade and AI-Focused Growth Push

Toast (TOST) is back in the spotlight after BNP Paribas Exane bumped the stock up to an Outperform rating, just as the company leans into AI driven restaurant tools and steadier margin improvement.

See our latest analysis for Toast.

Even after a choppy few months and a roughly 7 percent year to date share price decline, Toast’s three year total shareholder return of about 96 percent suggests the longer term growth story is still very much intact. Recent AI focused upgrades also hint that momentum could be rebuilding rather than fading.

If Toast’s AI push has your attention, it might be a good moment to see what else is emerging across high growth tech, starting with high growth tech and AI stocks.

Yet with the stock still below consensus price targets but riding a powerful AI and recurring revenue story, are investors looking at an underappreciated compounder, or a name where future growth is already fully priced in?

Most Popular Narrative Narrative: 28.5% Undervalued

With Toast’s fair value estimate sitting well above the last close at $33.83, the dominant narrative leans toward meaningful upside from here.

The consistent increase in ARPU, both through upselling additional modules (inventory, loyalty, marketing, etc.) and innovative fintech solutions like Toast Capital, suggests Toast is successfully scaling its platform ecosystem, boosting net retention rates and high margin recurring revenue streams.

Read the complete narrative.

Curious how a recurring revenue engine, rising margins, and a rich future earnings multiple can still line up to a discount today? The narrative unpacks bold growth, profitability, and valuation assumptions that could reframe how you see Toast’s current share price, but the exact numbers and timing might surprise you.

Result: Fair Value of $47.35 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained marketing spend and hardware cost pressures, combined with softer restaurant sales trends, could quickly challenge the upbeat growth and margin narrative.

Find out about the key risks to this Toast narrative.

Another View: Rich Multiples Signal Caution

While the narrative model points to upside, the current earnings multiple tells a tougher story. Toast trades at about 72.9 times earnings, far above the US Diversified Financial industry at 13.7 times, peers near 38 times, and even a 22.4 times fair ratio. That gap suggests real valuation risk if growth expectations slip.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Toast Narrative

If you would rather challenge these assumptions or dig into the numbers yourself, you can build a personalized view of Toast in minutes. Get started with Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Toast.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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