Toast Stock: Wall Street Desperate For Growth After CEO Steps Down
Wall Street is desperate for growth expected at Toast after a leadership shakeup that it announced on Tuesday.
Analyst Rayna Kumar from UBS, upgraded the stocks of the restaurant technology company on Wednesday to purchase from a Neutral, citing
“improved potential for quarterly net new location adds and margin expansion”
additionally to an anticipated smooth change to a new CEO.
The co-founder of Toast, Aman Narang, who is the current chief operating officer of Toast, will be taking the top seat, which will be effective from January 1st, 2024.
Meanwhile, the current chief executing officer, Chris Comparato, who has been in the position since 2015 and made the company public, will be stepping down from the position but will remain a member of the board.
Right after the announcement, the stocks for Toast spiked 5.2% at the open of the market on Wednesday, which, however, turned lower by 1% later by the afternoon. The shares rose to 20% over the last 12 months.
“We see limited risk from the appointment … given [Narang’s] strategic leadership roles at Toast,”
Kumar told the clients in a note.
“According to our conversation with Toast, the transition was a planned event.”
Stephen Sheldon, an analyst from William Blair, termed Narang a “logical successor” despite the concern of selective investors.
“Narang lacks experience running a public company, which some investors may question, although we believe that his experience and familiarity with the company will likely overshadow those concerns,”
Sheldon said. He also added that he refuses to believe that
“this announcement implies any major strategic changes for Toast.”
“Over the next 2 years, we believe Toast’s investments should fuel industry-leading 30%+ gross profit growth,”
analysts added.
“Meanwhile, our review of macro trends make us incrementally more positive on the restaurant industry’s near-term growth prospects.”
In the Quarter 3, the company is expected to increase its revenue from $1.01 billion to $1.04 billion.
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