BMO Capital Markets has recently added Toast Inc. (NYSE: TOST) to its list of recommendations, awarding the company an “outperform” rating alongside a target price of $45. This bullish outlook stems from Toast’s noteworthy presence in the U.S. restaurant technology and payments ecosystem, where its innovative solutions are reshaping how restaurants operate. Analysts from BMO highlight the potential for Toast to further penetrate the market, especially considering that a considerable portion of restaurants still relies on outdated systems, leaving ample opportunity for Toast to make significant inroads.
Currently, Toast boasts an impressive 14% market share in the U.S. restaurant sector, yet the expansive landscape of approximately 875,000 establishments means that the potential for growth is substantial. The company is not merely confined to the restaurant space; it is also eyeing other adjacent sectors, such as food and beverage retail. As the company expands its footprint, analysts project continued market share gains, driven by a robust product suite that caters to a variety of operational needs. This multi-faceted approach positions Toast uniquely to harness additional revenue streams.
A critical component of Toast’s promising future is its unit economics, particularly its lifetime value to customer acquisition cost (LTV/CAC) ratio, which exceeds 6x. This metric illustrates that Toast can effectively acquire customers while ensuring their long-term profitability—an essential factor for sustained growth. Despite facing headwinds in the broader industry, such as fluctuations in gross payment volumes, BMO’s analysis suggests that Toast is poised to maintain or even enhance its profitability.
Global Expansion and Addressable Market
While Toast has found success in the U.S., its international expansion efforts are still in their infancy, with potential growth markets including Canada, the U.K., and Ireland, which represent an additional 280,000 establishments. Tapping into these markets could significantly bolster Toast’s overall reach and enhance its growth trajectory. Analysts believe that the company’s ability to replicate its U.S. success in these new territories will be a determining factor in its continued ascent.
Despite some recent volatility in Toast’s stock price—declining by about 15%—BMO analysts suggest that this dip presents an attractive investment opportunity. The firm’s optimistic projections, including an EBITDA forecast for 2026 that exceeds consensus estimates, imply that the company is well-positioned for future gains. The anticipated earnings growth of 34% in 2027 underlines the appeal for investors looking to capitalize on a company with significant upside potential.
Overall, with Toast Inc.’s strategic expansion plans, robust unit economics, and strong market position, it stands as an attractive option for investors interested in the evolving landscape of restaurant technology. The future looks bright, and as Toast scales its operations, it continues to solidify its role as a key player in the industry.