Toast is Friday's IBD Stock Of The Day, as the restaurant software provider broke out into a buy zone. Cleveland Research initiated TOST stock with a buy rating.
Toast has already surged more than 50% in 2024, but Cleveland Research's 33 price target suggests further upside.
Cleveland Research projected Friday that the Boston-based company could continue to see market share gains and outperform consensus estimates in the near- and medium-term outlook.
Toast's products range from point-of-sale hardware, kitchen displays, payment processing, supplier and invoice management to payroll, delivery management, menu consultation and marketing programs.
The note from Cleveland Research comes after Bank of America on Sept. 17 raised its TOST price target to 28 from 26. Bank of America maintained a neutral rating.
Toast reported better-than-expected second-quarter earnings and revenue in August. Analysts forecast Q3 EPS popping 180% with sales increasing 25%. For the full year, analyst consensus has earnings growing 444% to 49 cents per share. Profit is expected to hit $1.18 per share in 2027, which would represent a 1,211% increase compared to 2023 levels.
Toast's main competitors include Square-parent Block, Fiserv's Clover, Shift4, Lightspeed, TouchBistro and SpotOn.
Toast Co-Founders Set IPO
Co-founders Chris Comparator, Steve Fredette and Aman Narang worked at Endeca, a business intelligence software firm. Oracle acquired Endeca in 2011. Comparator stepped down as chief executive in September 2023, with Narang taking the helm.
Toast was founded in 2012, but the stock didn't go public until September 2021. The initial public offering raised $870 million. In 2020, the company rolled out Toast Capital, which provides loans to restaurants.
Toast has also been active in making acquisitions. In 2019 Toast bought StratEx for $44 million. Chicago-based StratEx provides human resources and payroll software.
In 2021, Toast also bought XtraChef for $48 million. XtraChef sells supplier management software. Then in 2022, Toast acquired Sling, which has employee scheduling software that allows workers to change shifts and communicate with colleagues.
Based in Boston, the company has U.S. offices in Chicago, Omaha, Reno, Nev.; San Francisco and Nashville. Toast's software runs on cloud-computing infrastructure at Amazon Web Services, part of Amazon.com.
Toast Stock Performance
TOST shares jumped 2.4% to 27.99 during market trade on Friday, hitting the best levels since early 2022 as they broke out above an official buy point.
The stock is exiting a consolidation going back to mid-July or mid-May, attempting to decisively clear a trading range going back to early 2023.
Toast stock is now just above a 27.88 entry, according to MarketSurge chart analysis.
Shares hit an intraday high of 29.92. Two prior breakouts quickly fizzled.
The stock is up more than 12% in September after a 5% decline in August. To date in 2024, Toast stock has surged around 56%, outperforming the broader IBD tracked Finance-Credit Card/Payments industry group, which has rallied 10.5%.
Meanwhile, Toast rival Shift4 stock traded higher in a buy zone Friday, 3% above an official 84.26 buy point.
Toast stock has a 70 Composite Rating out of a best-possible 99. The stock also has an 86 Relative Strength Rating and a 54 EPS Rating.
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