Toast is Monday's pick for IBD 50 Growth Stocks To Watch as shares are setting up ahead of the company's earnings report. The technology stock retook a key level on Friday.
Toast provides hardware and software used by around 106,000 eateries. Clients range from food trucks to casual dining and breweries, and on to upper-scale restaurants.
Its technology includes point-of-sale software, online ordering apps, payroll capabilities, customer rewards programs and inventory management. The restaurant technology stock is also on the IBD Leaderboard watchlist.
Toast Stock Heading Toward Buy Point
Toast stock rose around 1.5% on Monday, adding to Friday's 3.4% jump when it reclaimed its 50-day moving average. Also, shares are in an undefined base and climbing toward the 25.63 buy point, according to MarketSurge pattern recognition.
Shares popped nearly 17% in heavy volume, then retreated after Toast reported its fourth-quarter earnings results on Feb. 15. Toast stock recovered and went on to form a new base in early March. Volume has been lighter than average since the new base formed. Shares gained more than 30% year to date.
But the technology stock has a long way to go to get back to its all-time high of 69.93 reached on Nov. 3, 2021. Toast stock started trading on Sept. 21, 2021 at an initial offering at 40 per share.
Analysts See Toast Turning A Profit
Toast reported a smaller-than-expected fourth-quarter loss and higher sales than projected on Feb. 15. Toast's quarterly sales growth decelerated to 35% from 45% and 37% in the prior two quarters.
Analysts expected Toast to show a five-cent profit in its first quarter with continued profitability in the next three quarters, according to FactSet. Further, full-year 2024 earnings per share is estimated at 39 cents, swinging from a 46-cent loss per share in 2023.
Sales growth is expected to slow to 28% for the first quarter, with 25% growth projected for the following three quarters. Toast will report its first-quarter results on May 7 and host an Investor Day on May 29.
Toast stock holds an Accumulation/Distribution Rating of A- and a 1.3 up/down volume ratio.
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