BNP Paribas Exane cuts Toast stock rating on competition concerns

BNP Paribas Exane has reduced its rating on Toast Inc. (NYSE:TOST) stock to Neutral from Outperform, lowering the price target to $35 from $38. Analyst Thomas Poutrieux believes Toast's recent strong performance will come to an end as Square starts catching up in the restaurant point-of-sale space. The company has already seen the impact of new total addressable markets and AI product monetization reflected in consensus estimates.

Despite competitive pressures, Toast continues to show strong fundamentals, with a 23% revenue growth, a market cap of $19.4 billion, and net income of $486 million over the past year. The company generated $576 million in levered free cash flow. However, Toast expects its core U.S. net additions to decline year-over-year in 2027.

Analysts have noted that Square is improving its product portfolio in the restaurant vertical, and other private players are also gaining traction in this space. Toast recently announced a significant integration with Google, allowing AI-powered food ordering through Google Maps, which adds to the company's technological advancements and investment interest.