Have you ever watched a stock you really liked get absolutely crushed for months, only to feel that little voice in your head whispering “maybe this is finally the bottom”? Yeah, me too. That’s exactly where a lot of investors are with Toast right now.
The restaurant-focused fintech has had a rough ride through 2025 — down about 4% while the broader market kept climbing. But this week something interesting happened: one of the biggest names on Wall Street basically said “enough is enough.”
Why JPMorgan Just Changed Its Tune on Toast
In a note that caught a lot of people’s attention, analysts led by Tien-tsin Huang upgraded Toast from neutral all the way to overweight and slapped a $43 price target on it. At Wednesday’s close around $35, that’s roughly 22% upside from here. Not life-changing money, maybe, but definitely enough to make you lean forward in your chair.
So what changed? In short: the price finally got cheap enough that the growth story looks too good to ignore anymore.
The Growth Story Still Looks Exceptional
Let’s be honest — Toast isn’t some unknown startup anymore. It’s the dominant modern point-of-sale player in the restaurant space, especially with independent and small-chain operators. And the restaurant industry, for all its headaches, is massive and still shockingly under-penetrated when it comes to modern cloud software.
Think about it. Most legacy POS systems out there still run on Windows XP-era hardware. They’re slow, clunky, and charge restaurants an arm and a leg in fees. Toast came in with a clean, Android-based, all-in-one platform that actually makes owners’ lives easier. That’s not marketing fluff — that’s the reason they’ve built such fierce brand loyalty in the space.
“We like Toast as a disruptive player in a restaurant industry that is overdue for IT modernization, and we appreciate the strong, organic brand it has developed, particularly in the SMB end of the market.”
The analysts see the company continuing to post top-decile growth numbers through the rest of the decade. We’re talking 20%+ recurring gross profit growth for years. That’s the kind of trajectory you usually only see in much earlier-stage companies.
Multiple Expansion Levers Still Ahead
Here’s what really got my attention: JPMorgan believes Toast can keep “stacking” new addressable markets on top of its core restaurant business — think retail food & beverage, larger enterprise locations, and meaningful international expansion — all while maintaining attractive returns on invested capital.
In plain English? The same playbook that crushed it in U.S. independent restaurants can work elsewhere. And every time they successfully enter one of these adjacent markets, the valuation multiple should expand a little more.
- Retail food & beverage (coffee shops, bakeries, quick-service beyond traditional restaurants)
- Enterprise rollouts (regional chains finally ready to rip out legacy systems)
- International (Canada already growing fast, Europe and beyond on deck)
Each of these feels incremental right now, but put them together over a few years and you’re looking at a dramatically larger company with the same high-margin software economics.
Profitability Is Finally Kicking In
For a long time the big knock on Toast was that it was growing fast but burning cash like crazy. That narrative is rapidly becoming outdated.
The company has shown real expense discipline over the past year, and the analysts now expect nearly $1 billion in adjusted EBITDA by 2027. That’s the kind of margin profile that gets growth investors really excited — especially when it’s paired with the revenue growth rates Toast is still putting up.
Put simply, you’re getting high-teens to low-20s revenue growth with margins that are starting to look more like a mature software business than a hyper-growth disruptor throwing money at everything. That combination is gold for valuation.
How Toast Compares to the High-Growth Peer Group
One of the more interesting parts of the note was how the analysts positioned Toast’s valuation versus other high-growth fintech and software names.
They’re willing to pay a premium multiple because Toast is growing faster than almost anyone else in the comp group from 2024 through 2028, while profitability is improving at the same time. That’s rare air.
Most companies face a trade-off: grow really fast and lose money, or slow down growth to get profitable. Toast appears to be threading the needle — keeping the pedal down on growth while the margin curve inflects sharply higher.
| Company | Expected Growth | Profitability Trend | Multiple |
| Toast | Top decile | Strongly improving | Premium justified |
| Typical peer | Mid-teens | Slow margin expansion | Trading in-line or discount |
When you see that laid out, it’s easier to understand why the analysts are comfortable assigning a richer multiple than most of the peer group.
Risks? Of Course There Are Always Risks
Look, I’m not here to pretend this is a risk-free home run. The restaurant industry is notoriously cyclical. If we get a meaningful consumer slowdown, location closures could pressure net retention. Competition isn’t sleeping — Square, Clover, Lightspeed, and others all want a piece of this market.
International expansion always sounds great on paper but can be messy in practice. And yes, the stock has been a serial disappointer at times when it comes to guidance.
But here’s the thing: most of those risks feel pretty well reflected at current levels. The bar isn’t sky-high anymore. After the punishment the stock has taken, the asymmetric upside starts to look compelling.
The Bottom Line
Sometimes the best opportunities come from stocks that everyone loved two years ago, then spent a year hating. Toast feels like it’s squarely in that camp right now.
JPMorgan’s upgrade isn’t some random contrarian hot take — it’s a detailed, numbers-driven argument that the combination of still-exceptional growth, rapidly improving profitability, and a reasonable valuation adds up to meaningful upside from here.
In my experience, when a high-quality growth name gets this oversold and then the fundamental inflection starts showing up in the numbers, it’s usually worth paying attention.
Toast won’t be the right fit for every portfolio. But for growth-oriented investors with a 2-3 year horizon? This one just moved way up the watchlist.
Disclosure: The author holds no position in Toast at the time of writing, but reserves the right to buy or sell without notice. This is not personalized investment advice.
