JP Morgan Raises Toast's Price Target to $52, Citing Strong Q2 Earnings and Growth

JP Morgan has increased Toast's price target from $42 to $52, a 19.2% upside from the current market price of $43.62. The bank cited strong Q2 earnings, including a 25% year-over-year revenue growth and a beat on Wall Street estimates. Toast has expanded its base to 148,000 locations, with a record 8,500 net new locations added. However, JP Morgan maintains a Neutral rating due to the stock's valuation.

JP Morgan has significantly increased its price target for Toast, Inc. (TOST), from $42 to $52, representing a 19.2% upside from the current market price of $43.62. The bank cited strong Q2 earnings, including a 25% year-over-year revenue growth and a beat on Wall Street estimates. Toast has expanded its base to 148,000 locations, with a record 8,500 net new locations added. However, JP Morgan maintains a Neutral rating due to the stock's valuation.

Toast, Inc. has made significant strides in its long-term growth strategy, projecting 29% year-over-year growth in fintech and subscription gross profit for 2025. This momentum is being fueled by its strategy to expand in U.S. SMB restaurants and penetrate new markets. The company's recent international expansion into Australia and a newly forged partnership with American Express (AXP) highlight its potential to solidify its foothold in restaurant technology and financial services globally [2].

The Australia launch marks Toast’s fourth international market, expanding into new customer segments across enterprise, global, and food and beverage retail. Toast onboarded its first customer, Graze Craze, as part of this initiative. Already a U.S. customer, Graze Craze chose Toast over a local POS system provider. It now uses Toast’s guest displays, kitchen screens, and online ordering, with plans to add marketing, loyalty, and multi-location tools to support its expansion in Australia [2].

Another major move shaping Toast’s 2025 outlook is its strategic partnership with American Express. The collaboration aims to improve the dining experience for restaurants and diners across Resy, Tock, and Toast locations in the United States, while creating new revenue streams for the company. The partnership intends to combine Resy and Tock’s guest tools with Toast’s Digital Chits to provide staff with customer insights during service. It will also explore new benefits for guests and AMEX Card Members, and increase visibility for restaurants, wineries, cafes, and bars through the Local by Toast app [2].

Despite the strong outlook, Toast faces intense competition from local POS providers as well as other powerhouse software providers like Block (XYZ) and Oracle (ORCL). Tech giant Oracle offers a wide range of products, including POS systems like Oracle Retail Xstore and Oracle MICROS Simphony POS. MICROS Simphony targets large restaurant chains, hotels, casinos, and resorts. As a unified cloud-based POS platform, it enables restaurant owners to efficiently manage both online and on-premise operations in real-time from any device. It provides exceptional hospitality from arrival to departure and beyond, using advanced POS and property management solutions [2].

Oracle’s revenues rose 11% in USD and cc year over year to $15.9 billion, driven by continued momentum from its Oracle Cloud Infrastructure business, including winning cloud-computing contracts from AI-focused startups. It provided robust guidance for fiscal 2026, expressing strong confidence in accelerating growth rates. Total company revenues are expected to reach at least $67 billion, representing 16% growth in cc and exceeding its previous guidance by more than $1 billion [2].

Block, formerly known as Square, offers financial and marketing services through its comprehensive commerce ecosystem that helps sellers start, run, and grow their businesses. Block’s Square for Restaurants POS platform competes directly with TOST’s offerings. The company’s strategic initiatives and partnerships position it as a formidable competitor in the restaurant technology sector [2].

While JP Morgan's price target increase reflects the company's strong performance and growth prospects, the Neutral rating indicates caution due to the stock's valuation. Investors should closely monitor Toast’s ongoing expansion efforts, strategic partnerships, and competitive landscape to make informed investment decisions.

References:
[1] https://finance.yahoo.com/news/mzti-q2-deep-dive-volume-053053788.html
[2] https://www.tradingview.com/news/zacks:49c137741094b:0-australia-launch-amex-deal-will-tost-s-recipe-fuel-its-growth-engine/