Toast (TOST) Stock Forecast & Price Target

Toast's forecast for adjusted EBITDA in fiscal 2024 has increased to a range of $565-$585 million, reflecting strong operational performance and improved financial metrics. The company is gaining traction in the US restaurant market, evidenced by the addition of a record 8,500 locations in the second quarter, which positions it for continued growth. Furthermore, for fiscal year 2025, Toast anticipates gross profit from subscription services and FinTech solutions to reach $1.815-$1.835 billion, supported by the expansion of its location base and the introduction of new software offerings, indicative of robust recurring revenue potential.

The negative outlook on Toast's stock is primarily driven by the potential stagnation of recurring revenue growth, particularly in the event of a prolonged economic downturn that could impact consumer spending and hinder new restaurant openings. Additionally, the company's current lack of profitability, attributed to ongoing investments for growth, raises concerns about execution risk and its ability to scale effectively amidst increasing financial losses. Furthermore, ongoing supply chain and chip shortages may lead to hardware bottlenecks, extending implementation times and delaying customer onboarding, which could further impede growth prospects.