It’s time to “take a bite of Toast ,” according to UBS. The bank upgraded shares to buy from neutral in a Wednesday note. It also raised its price target to $30 from $25, implying 38% upside potential from Tuesday’s close. Analyst Rayna Kumar cited improved potential for quarterly net new location additions, in addition to margin expansion. “Toast remains well-positioned to capture the restaurant industry’s ongoing shift from legacy technology to omni-channel, integrated software solutions,” Kumar said. “While the competitive environment remains intense and macro uncertainty looms, Toast continues to prove itself as a top provider, evidenced by the recent acceleration of location net Adds.” Kumar forecasts Toast’s investments to lead to more than a 30% rise in gross profit growth over the next two years. A positive macro backdrop also is improving the restaurant industry’s near-term growth prospects, she added, which could further boost Toast’s outlook. “With shares trading at just ~0.2x ’25E EV/GP/ Growth, the market doesn’t fully account for durable top-line growth, healthy margin expansion and a stable restaurant outlook, in our view,” Kumar said. The company is well-positioned to gain even more market share through its broadening solutions offerings and secular demand for restaurant point-of-sales technology, said Kumar. Shares jumped nearly 4% Wednesday during premarket trading. The stock has rallied more than 20% year to date. —CNBC’s Michael Bloom contributed to this report.
