This Toast Analyst Sees Surge In GLP-1 Drugs & More Spoiling Long Term Growth Prospects

Mizuho Securities analyst Dan Dolev downgraded Toast Inc TOST, a digital technology platform built for restaurants, to Neutral from Buy and lowered the price target to $16 from $30.

The analyst is bearish on the company's muted success in enterprise business (as volumes per location slows faster than restaurant inflation), higher reliance on TOST Capital, and potential headwinds from student loan payments leading to declining restaurant spending.

In the long term, Dolev believes that the rise of GLP-1 drugs like Ozempic for the over 100 million Americans with Type-2 diabetes and obesity can curb the company's volumes. 

Consequently, the analyst lowered its FY24 gross revenue and adjusted EBITDA estimates to $4,824 million (from $5,047 million) and $148 million from $263 million, about 3% below revenue and adjusted EBITDA consensus estimate. 

Also, Dolev cut FY25 gross revenue and adjusted EBITDA estimates to $5,920 million (from $6,304 million) and $315 million (from $511 million), 3% below consensus revenue and 4% below consensus adjusted EBITDA. 

Also Read: Toast's CEO and Chair Transition Unlikely to Affect Investors, Analyst Says

Price Action: TOST shares are trading lower by 2.91% at $18.18 on the last check Monday.