Mizuho downgrades Toast on student loan, weight loss drug risk

Mizuho downgraded Toast to Neutral from Buy with a price target of $16, down from $30. The analyst sees the company’s gross payment volume per location slowing faster than restaurant inflation, which could signal “muted success” in enterprise. In addition, increased reliance on Toast Capital adds risk late in the cycle while Mizuho’s survey points to potential headwinds from looming student loan payments, the analyst tells investors in a research note. Longer-term, the firm believes the rise of GLP-1 drugs like Ozempic for the over 100M Americans with type-2 diabetes and/or obesity could weigh on Toast’s volumes. Mizuho says its base case of $16 per share assumes no meaningful impact from GLP-1. The firm’s bear case of $14 per share assumes double-digit penetration of GLP-1 drugs.