‘Significant Opportunity’ For Toast (TOST), Says Wells Fargo

Toast Inc (NYSE: TOST) shares edged higher by 0.11% Friday following Wells Fargo analyst Jeff Cantwell's positive commentary on the stock, talking up its prospects despite the uncertain macroeconomic backdrop.

The analyst maintained an Overweight rating and $27 price target on Toast shares following a call with industry experts who believe the company has a “significant opportunity ahead” in a resilient restaurant space.

They are said to have highlighted the company's technology as a way for restaurants to reduce their employee headcounts while still providing a positive guest experience. The industry experts are said to have labelled Toast the “best-in-class” solution, as it has the best understanding of how to serve the day-to-day operations of the restaurant industry.

However, despite their view, the stock is down over 46% in 2022 and 47% in the last 12 months as the current market environment weighs on consumer spending.

Wells Fargo's note echoed Wolfe Research's sentiment at the end of November when Wolfe analyst Darrin Peller initiated coverage of Toast with a Peer Perform rating, stating that he sees Toast as a “best-in-class” restaurant point of sale software provider that should see “sustainable industry-leading” growth.

However, Peller's Neutral stance on the stock is due to the backdrop of upcoming macro headwinds as well as a premium valuation and little profitability.

Overall, out of seven analysts, six have a Buy rating, and one has a Hold rating on Toast Inc, according to TipRanks. In addition, the average price target is $27.50, representing a potential 46.6% upside.