Toast Is a Dominant Player With Impressive Momentum, Says Analyst

Wedbush analyst Moshe Katri initiated coverage on the shares of Toast Inc TOST with an outperform rating and announced a price target of $30.

The company reported first-quarter revenue of $1.075 billion, beating the analyst consensus estimate of $1.041 billion.

Full-year 2024 adjusted EBITDA is expected to be between $250 million and $270 million.

Toast, according to the analyst, serves as the restaurant operating system connecting front-of-house and back-of-house operations across dine-in, takeout and delivery channels.

By enabling capabilities through a single, integrated platform, the company improves the experiences across the ecosystem, added the analyst.

Toast is well positioned to add more locations in 2024, reflected in the strong U.S. SMB pipeline, while pointing to gradual, increased traction in international markets, the analyst asserted.

The analyst said important metrics such as Guest Potential Value (GPV) and firm pricing are moving in the right direction.

Given Toast's robust location expansion in the U.S. and recent improvements in operating and financial metrics, the analyst expects the company to post 30% + Y/Y gross profit and adjusted EBITDA growth in FY24 and FY25, respectively. 

The $30 price target represents a 36.3x EV/EBITDA multiple on the analyst's FY25 AEBITDA estimate.

TOST Price Action: Toast shares closed Friday up 0.28% at $25.46.

Photo: Toast Inc.