On Wednesday, Keefe, Bruyette & Woods adjusted their financial outlook for Toast Inc. (NYSE: TOST) shares, increasing the price target from the previous $25.00 to $26.00. The firm sustained its Market Perform rating for the company's stock.
The revision follows Toast Inc.'s first-quarter results for the year 2024, which prompted the firm to revise its earnings per share (EPS) estimates for the following years.
The EPS estimate for 2024 has been slightly improved to a loss of $0.19, up from the prior estimate of a $0.20 loss. More notably, the EPS projection for 2025 has been nearly doubled, with an anticipated profit of $0.17 compared to the earlier forecast of $0.09.
The new price target of $26.00 reflects a valuation of 35 times the enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) based on the firm's 2025 estimates. This valuation method indicates a more optimistic view of the company's earnings potential in the medium term.
Toast Inc., a cloud-based restaurant software company, has been under the scrutiny of market analysts, with financial institutions closely monitoring its performance and future earnings potential. The updated figures suggest a belief in the company's ability to improve its financial health over the next couple of years.
InvestingPro Insights
Investors considering Toast Inc. (NYSE: TOST) will find the latest data from InvestingPro particularly insightful. The company's market capitalization stands at a robust $13.13 billion, signifying its substantial presence in the market. Despite not having turned a profit over the last twelve months, analysts are optimistic, forecasting net income growth and predicting profitability for the year ahead. This aligns with Keefe, Bruyette & Woods' improved EPS estimates for 2025, indicating a potential shift in the company's financial landscape.
According to InvestingPro, Toast Inc. is currently trading at a high Price / Book multiple of 11.0, which may raise valuation concerns for some investors. However, the company's strong revenue growth of 41.52% over the last twelve months and a significant 59.37% price uptick over the last six months suggest a positive momentum that could justify the premium. Additionally, Toast's liquid assets exceed its short-term obligations, reflecting a solid financial footing that supports operations and potential growth initiatives.
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