Toast (TOST) Stock Forecast & Price Target

Toast has demonstrated strong financial growth, with Financial Technology Solutions revenue increasing by 28% year-over-year to $1,090 million, alongside a recurring gross profit rise to $392 million from $281 million the previous year. The company is also successfully expanding its market presence, projected to gain an additional 2-2.5% market share annually through 2027, driven by robust recurring revenue growth linked to its expanding location base and new software offerings. Additionally, Toast's subscription revenue surged 41% year-over-year to $200 million, supported by ongoing improvements in annual recurring revenue (ARR) conversion rates, indicating a positive trajectory in its financial outlook.

The analysis indicates a negative outlook for Toast's stock, primarily driven by a decline in gross platform volume (GPV) per location, which fell to $319,000 from $328,000 in the previous quarter, marking a downward trend that may hinder revenue growth. Despite a slight improvement in operating income to $32 million compared to the previous year’s loss of $56 million, the company faces ongoing profitability challenges due to persistent investments for growth and the potential for elongated economic downturns, which could significantly impact recurring revenue. Furthermore, projections for the next two years suggest flat hardware and professional services revenue, coupled with expectations of slowed adjusted EBITDA margin expansion in 2025 as investment spending ramps up, raising concerns about the firm's ability to scale effectively in a competitive environment.