On Thursday, Needham maintained a Buy rating on Toast Inc. (NYSE:TOST) stock with a steady price target of $30.00.
The endorsement follows an analyst day event in New York City, where Toast's management showcased the company's progress in capturing the small and medium-sized business (SMB) restaurant market.
They also highlighted an expanding total addressable market (TAM) as Toast ventures into new domains like food and beverage retail and international markets.
During the event, the company set optimistic medium-term financial goals, projecting over 20% annual growth in recurring gross profit for the next two to three years.
Additionally, EBITDA margins as a percentage of recurring gross profit are expected to range between 30-35%. Further, Toast raised its long-term EBITDA margin target to above 40%, an increase from the previous 30-35% goal.
Toast's strategy emphasizes not only growth but also profitability, which is reflected in the enhanced financial targets. The company's expansion of its product offerings is seen as a move to fortify its competitive edge in the global market.
With these factors in mind, Needham's stance on Toast remains positive, reaffirming the $30 price target for the company's shares.
The financial targets provided by Toast at the analyst day indicate the company's confidence in its business model and its ability to scale effectively.
The firm's focus on increasing its presence in both existing and new markets, while also aiming for higher profitability margins, underpins the optimism for its future performance.
InvestingPro Insights
In light of Needham's positive outlook on Toast Inc. (NYSE:TOST), real-time data and insights from InvestingPro further inform investors about the company's financial health and market performance. With a significant market capitalization of $13.12 billion, Toast is a notable player in the tech sector. Analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's growth trajectory. Additionally, Toast's revenue has shown impressive growth, with a 36.68% increase over the last twelve months as of Q1 2024, and a 31.26% quarterly revenue growth in Q1 2024.
Despite not paying dividends, Toast has seen a large price uptick of 58.91% over the last six months, reflecting investor enthusiasm. However, potential investors should be aware of the company's current negative P/E ratio of -55.21 and a high Price / Book multiple of 10.9, which may suggest a premium valuation. Investors looking to dive deeper into Toast's financials and future prospects can benefit from additional insights available on InvestingPro, where there are 8 more InvestingPro Tips to explore. Moreover, by using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing them with valuable tools to make informed investment decisions.
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