On Thursday, BofA Securities maintained a Neutral rating for Toast Inc. (NYSE:TOST) with a steady price target of $28.00. Toast, a company offering a cloud-based, end-to-end technology platform for the restaurant industry, has updated its total addressable market (TAM) to 1.4 million locations.
This expansion includes approximately 875,000 U.S. restaurants, 280,000 locations across the UK, Canada, and Ireland, as well as a new addition of 220,000 U.S. food and beverage retail sites.
The company's current operational footprint encompasses 112,000 live locations, with the vast majority, about 110,000, situated in the U.S., which represents around 13% of the U.S. restaurant TAM. The remaining locations are divided between approximately 2,000 in the UK, Canada, and Ireland, and around 1,000 in the U.S. food and beverage retail sector.
The newly targeted U.S. food and beverage retail vertical is projected to have an estimated annual gross merchandise volume (GMV) of $660 billion. This sector mainly consists of small to medium-sized businesses such as convenience stores, independent grocers, and bottle shops.
Toast's platform currently processes a significant portion of the GDP generated by the restaurant industry, with about 0.5% of U.S. GDP flowing through its systems, out of an estimated total of $1 trillion in annual U.S. restaurant sales, or approximately 4% of the U.S. GDP.
InvestingPro Insights
As Toast Inc. (NYSE:TOST) targets new growth opportunities within the U.S. food and beverage retail vertical, investors may take interest in the company's financial health and market performance. According to InvestingPro data, Toast boasts a market capitalization of $13.12 billion and has experienced a notable 36.68% revenue growth over the last twelve months as of Q1 2024. Despite not being profitable in the last twelve months, analysts are optimistic, predicting a turn to profitability this year, which could be a sign of positive momentum for the company.
InvestingPro Tips highlight that Toast's stock price has seen a large uptick over the last six months, with a 58.91% total return, reflecting investor confidence. Additionally, with four analysts having revised their earnings upwards for the upcoming period, there's a sense that the company's strategic expansion could be well-received in the market. However, potential investors should be aware of the company's high Price / Book multiple of 10.9 and its weak gross profit margins at 22.18%, which may influence investment decisions.
For those considering an investment in Toast, leveraging InvestingPro's platform can provide a deeper dive into the company's metrics and additional tips to guide your decision-making process. There are 9 additional InvestingPro Tips available for Toast, which you can access with a special offer: use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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