4. Toast, Inc. (NYSE:TOST)
Number of Hedge Fund Holders: 34
Toast, Inc. (NYSE:TOST) provides tech services for the restaurant industry. In earnings results for the fourth quarter of 2021, the company beat market expectations on earnings per share and revenue by $0.36 and $24 million respectively. Some of the growth catalysts for the stock, per an analysis by Baird, include “above-GDP growth vertical, increasing software modules per restaurant, the secular shift to payments, inflation benefits and the potential for international expansion”.
On April 4, Wells Fargo analyst Jeff Cantwell initiated coverage of Toast, Inc. (NYSE:TOST) stock with an Overweight rating and a price target of $29, underlining that the firm had a “unique software and payments platform” and forecast sustained share gains in the restaurant sector.
At the end of the fourth quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Aurora Cannabis Inc. (NASDAQ: ACB), compared to 38 the preceding quarter worth $567 million.
In its Q3 2021 investor letter, Baron Funds highlighted a few stocks and Toast, Inc. (NYSE:TOST) was one of them. Here is what the fund said:
“Toast, Inc. (NYSE:TOST) is a cloud-based end-to-end technology platform purpose-built for the restaurant industry. Its platform provides a comprehensive suite of cloud software products and financial technology solutions to its customers to connect front-of-house with back-of-house operations across all customer channels. Toast’s core module is its point-of-sale software solution and requires all customers to use Toast, Inc. (NYSE:TOST) as their payment processor. Customers then have the option to bundle or add-on additional modules across operations, digital ordering and delivery, marketing and loyalty, team management, and back office. Toast today powers 48,000 restaurants within the 860,000 U.S. restaurant industry, largely focusing on small- and medium-sized (“SMB”) restaurant customers (generally fewer than 10 locations but up to 50), with some larger enterprise customers as well. Toast is the clear market leader in SMB restaurant technology with the best product offering and only full, end-to-end platform. We believe that as restaurants continue to invest in technology at an accelerated pace emerging from COVID, Toast will be a big beneficiary given its leading market position and best-in-class product. At less than 6% penetration of U.S. restaurants and 3% penetration of its $15 billion recurring-revenue TAM, Toast has a long runway for growth by signing on additional locations to the platform and increasing the attach rate of its value-add modules. Only 54% of customers today use 4 or more of Toast’s 10-plus modules, each of which provide significant value to the customer and would drive Toast’s recurring revenue stream higher.”
