Shares of Toast Inc. TOST rose 1.2% in premarket trading Monday, after the provider of consumer payment systems for restaurants was upgraded at Mizuho, with analyst Dan Dolev saying a restaurant survey showed a “delicious path to profitability.” Dolev raised his rating to buy from neutral and lifted his stock price target to $24 from $22, implying 43% upside from Friday’s closing price of $16.82. Dolev said he was concerned that monetization via payments, coupled with looming pressure on take rates, would act as a drag on revenue, but take rates were “more stable than feared,” while maximizing software-as-a-service (SaaS) revenue and the use of payroll as a tool to up-sell customers are key catalysts. “Our proprietary Mizuho survey of 55 TOST restaurants uncovers the positive impact on sales and profits from cross-selling payroll and adjacent SaaS products,” Dolev wrote in a note to clients. The stock has tumbled 51.4% year to date through Friday, while the S&P 500 SPX has shed 23.6%.
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