Toast (TOST) Stock Forecast & Price Target

Toast's financial outlook appears strong, with adjusted EBITDA projected to range between $565 million and $585 million, an increase from the previous estimates of $540 million to $560 million. The company demonstrated significant growth in its core US restaurant market, adding a record 8,500 locations in the second quarter, which contributes positively to its expansion strategy. Furthermore, for fiscal year 2025, Toast expects gross profit from subscription services and FinTech solutions to reach between $1.815 billion and $1.835 billion, up from the prior forecast of $1.775 billion to $1.795 billion, highlighting robust recurring revenue growth potential driven by increasing location counts and enhanced service offerings.

The negative outlook on Toast's stock is primarily based on the expectation that recurring revenue growth may stall due to a potential prolonged economic downturn, which could adversely affect consumer spending and new restaurant openings. Additionally, Toast is currently unprofitable as it continues to invest heavily in growth, raising concerns about execution risk if its business model fails to scale effectively. Finally, ongoing supply chain issues and chip shortages pose a risk of hardware bottlenecks, potentially leading to extended implementation times and delays in customer onboarding, which could further hinder growth prospects.