Toast (TOST 1.98%) is seeing growing demand for its cloud-based technology platform for the restaurant industry. The market is noticing this, and the stock price rallied sharply this year, up 34% year to date.
While there are mixed opinions on the stock on Wall Street, analysts at Evercore ISI Group recently weighed in with an outperform (buy) rating and a $32 price target, representing a potential upside in the near term of 31%. Here's why Evercore might be right.
NYSE: TOST
Key Data Points
Why buy Toast stock
The mixed views on Toast's future are understandable. The company operates in a competitive market for restaurant software, and it reported a large net loss of $246 million last year. These are reasons why some analysts are not as bullish on the company's prospects, but the company's continued top-line growth suggests it has advantages that may be underestimated.
Toast seems to have the right solution that restaurant owners are looking for -- a platform that is easy for employees to use while improving business efficiency. This is why Toast ended 2023 with over 106,000 restaurant locations. It added over 6,500 net locations in the fourth quarter alone.
On the recent earnings call, CEO Aman Narang said Toast is becoming the "technology platform of choice for the entire restaurant industry." Management sees more ways to grow revenue over the long term, including pricing, upselling more services, and improving the capabilities of the platform.
If Toast continues to win market share, as management expects, and narrows its net losses, more analysts may follow Evercore and upgrade the stock to a buy, which could raise the market sentiment around the stock and send it higher over the next year. Toast seems to be in the early innings of a major growth opportunity.
