By Sam Boughedda
Mizuho Securities upgraded Toast Inc (NYSE:TOST) shares to Buy from Neutral, raising the price target to $24 from $22 per share in a research note Monday.
Analysts there stated that the firm's restaurant survey shows a "delicious path to profitability."
"Our proprietary Mizuho survey of 55 TOST restaurants uncovers the positive impact on sales and profits from cross-selling payroll and adjacent SaaS products," wrote the analysts. "The survey unveils that restaurants using TOST for payroll use an average 2x more SaaS products and pay $4-5K more per year vs. those that don't."
According to Mizuho, Toast's "restaurant land-grab is in full swing." Mizuho added that previous take rate concerns from October 2021 were more manageable than feared, while improving the SaaS attach rate is "the next key milestone."
"Our bottom-up model suggests that continued payroll & SaaS cross-sell success could help TOST reach profitability in '23, one year ahead of the current consensus expectation," the analysts concluded.