Toast downgraded to Neutral from Outperform at SMBC Nikko

SMBC Nikko analyst Andrew Bauch downgraded Toast to Neutral from Outperform with a price target of $23, down from $26. The company delivered the most impressive set of results vs any name within the analyst’s coverage in 2022, but after its Q4 results, the confidence that the trend can continue is diminished, the firm tells investors in a research note. SMBC cites three key developments in the quarter that include a surprise retrenchment in SaaS average revenue per user, a mixed organic revenue growth outlook for FY23, and a growing mix from Toast Capital. The firm adds that while investing in Toast Capital is the right long-term strategic decision, it can also "sympathize with credit-conscious investors" who are less enthused if quarterly beats are driven by a lending business.