Core Viewpoint - The year 2026 is anticipated to be unfavorable for passive investing, particularly for strategies relying on ETFs that track the broader market, as large-cap stocks are believed to have excessive valuations that could lead to losses [1] Group 1: Market Analysis - The large-cap stocks that contributed significantly to the gains in 2025 are expected to face valuation challenges in 2026 [1] - Passive investment strategies may not yield favorable results in the upcoming year, indicating a potential shift in market dynamics [1] Group 2: Analyst Background - The analyst has extensive experience in covering technology companies on Wall Street and has worked in Silicon Valley, providing insights into current industry trends [1] - The analyst has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, indicating a strong presence in the investment community [1]

Group 1 - Toast, Inc. (NYSE:TOST) is recognized as one of the 13 Best Blue Chip Stocks to Buy Under $50 [1] - JPMorgan upgraded Toast, Inc. to Overweight from Neutral, maintaining a price target of $43, citing potential upside from regulatory changes in interchange fees [2] - The company reported a 34% increase in revenue for Q3 2025, with margins at 35% and over $2 billion in Annual Recurring Revenue (ARR) for the first time [3] Group 2 - Toast's Enterprise, international, and food and beverage retail segments are projected to reach a combined $100 million in ARR this year, with potential for each to grow into $1 billion ARR opportunities [4] - The company is a cloud-based, all-in-one digital technology platform tailored for the restaurant industry [4]

Group 1 - Toast, Inc. (NYSE:TOST) is recognized as one of the 14 most promising fintech stocks to invest in, with UBS reiterating a Buy rating and a price target of $50 [1] - JPMorgan upgraded its rating on Toast, Inc. to Overweight, highlighting that 2026 will be a fresh start for payments and fintech stocks after a challenging 2025 [2] - Analysts expect Toast, Inc. to sustain "top decile growth" as a leader in software-led payments, with a rule of 54% projected for 2026 [3] Group 2 - Toast, Inc. provides a cloud-based, all-in-one digital technology platform designed for the restaurant industry, offering solutions across various operational areas including point of sale and digital ordering [4] - BNP Paribas Exane upgraded Toast, Inc. from Neutral to Outperform, maintaining a price target of $40 [3]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Toast (TOST), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank to make informed investment decisions [1][5][11]. Brokerage Recommendations for Toast - Toast has an average brokerage recommendation (ABR) of 1.79, indicating a consensus between Strong Buy and Buy, based on recommendations from 29 brokerage firms [2][5]. - Out of the 29 recommendations, 17 are classified as Strong Buy, accounting for 58.6%, while one is classified as Buy, making up 3.5% of the total recommendations [2]. Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations have limited success in guiding investors towards stocks with the highest price increase potential [5]. - Analysts from brokerage firms often exhibit a strong positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell recommendations [6][11]. Zacks Rank as an Alternative - The Zacks Rank, which categorizes stocks from 1 (Strong Buy) to 5 (Strong Sell), is presented as a more reliable indicator of a stock's near-term price performance, driven by earnings estimate revisions [8][12]. - The Zacks Rank is updated more frequently than the ABR, reflecting timely changes in earnings estimates and business trends [13]. Current Earnings Estimates for Toast - The Zacks Consensus Estimate for Toast's current year earnings remains unchanged at $1.04, suggesting stability in analysts' views regarding the company's earnings prospects [14]. - Due to the unchanged consensus estimate and other factors, Toast currently holds a Zacks Rank of 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [15].

Core Insights - Toast (NYSE: TOST) and Block (NYSE: SQ) both reported Q3 2025 earnings that exceeded revenue estimates but fell short on earnings per share (EPS) [1] Company Performance - Toast reported Q3 2025 earnings that beat revenue estimates [1] - Block also reported Q3 2025 earnings that surpassed revenue expectations [1] - Both companies missed EPS targets for the quarter [1]

Group 1 - The core viewpoint of the article indicates that JPMorgan has downgraded the ratings of FISV and PYPL from "Overweight" to "Neutral," suggesting that it is too late to sell and too early to buy [1] - JPMorgan's report highlights that the payment sector is experiencing its worst performance in 15 years, excluding the COVID-19 pandemic, due to slowing market growth and concerns over commoditization [1] - The year 2026 is seen as critical for both FISV and PYPL, requiring them to demonstrate execution capabilities and invest in new initiatives and technologies, leading to both potential upsides and risks of underperformance [1] Group 2 - JPMorgan upgraded the rating of TOST from "Neutral" to "Overweight," focusing on companies with pricing power, strong margins, and order growth as it looks ahead to 2026 [1] - Despite a 6% decline in TOST's stock price since 2025, earnings expectations have been raised by 27%, and the composite metric of "growth + profitability" for 2026 has been established [1] - If credit card interchange fee regulations are implemented, TOST may have additional upside potential, which contributed to the rating upgrade [1]

Core Viewpoint - J.P. Morgan recommends shares of Visa and Toast, highlighting their quality businesses despite struggling for momentum in 2025 [1] Company Analysis - Visa is identified as a strong business with potential for growth, yet it has faced challenges in gaining momentum in the current year [1] - Toast, similarly, is recognized for its quality operations but has also struggled to achieve significant progress in 2025 [1]

Airline Industry - Airline stocks are experiencing a resurgence due to healthy revenues and increased demand for premium travel, with Delta Airlines (NYSE: DAL) rising from $65 to $67.49 following a Citi upgrade to a buy rating with a $77 price target [1] - American Airlines (NASDAQ: AAL) received a buy rating from Citi with a $19 price target, while United Airlines (NASDAQ: UAL) was also upgraded with a $132 price target [1] Technology Sector - Goldman Sachs reiterated its buy rating on Salesforce (NYSE: CRM) after the company reported earnings, setting a price target of $385, with EPS of $3.25 beating estimates by 39 cents and revenue of $10.26 billion reflecting an 8.7% year-over-year increase [2] - Analysts from Wedbush, Evercore, Morgan Stanley, and Wells Fargo have also provided positive ratings on Salesforce, with price targets ranging from $265 to $405 [3] Restaurant Technology - JPMorgan has given Toast (NYSE: TOST) an overweight rating with a price target of $43, highlighting its potential as a disruptive player in the restaurant industry, which is in need of IT modernization [4] - Toast is noted as one of the fastest growers in its competitive group from FY24-28E, with improving profitability justifying a high valuation and supporting the overweight rating [5]

Core Viewpoint - The article summarizes key research rating adjustments from Wall Street that are likely to influence market trends, highlighting companies with upgraded, downgraded, and newly initiated ratings [1][6]. Upgraded Ratings - Toll Brothers (TOL): JPMorgan upgraded the rating from "Neutral" to "Overweight," raising the target price from $138 to $161, citing significantly higher gross and operating margins compared to industry averages [5]. - Toast (TOST): JPMorgan upgraded the rating from "Neutral" to "Overweight," maintaining the target price at $43, with expectations of improved performance if regulatory policies on transaction fees are implemented [5]. - Accelerant (ARX): Citizens JMP upgraded the rating from "Market Perform" to "Outperform," setting a target price of $20, indicating that market concerns over its related party business have been overstated [5]. - UMH Properties (UMH): Colliers upgraded the rating from "Neutral" to "Buy," increasing the target price from $16 to $17, highlighting the resilience of the manufactured housing sector [5]. - Descartes Systems (DSGX): Raymond James upgraded the rating from "Market Perform" to "Outperform," setting a target price of $118, noting that the current price-to-EBITDA ratio is near a 10-year low, positioning it well for a market recovery [5]. Downgraded Ratings - PayPal (PYPL): JPMorgan downgraded the rating from "Overweight" to "Neutral," lowering the target price from $85 to $70, indicating that 2026 will be a critical year for execution and investment [5]. - Sociedad Química y Minera (SQM): Goldman Sachs downgraded the rating from "Buy" to "Neutral," raising the target price from $45 to $63, as the stock has risen 80% this year, exceeding fundamental support [5]. - Lennar (LEN): JPMorgan downgraded the rating from "Neutral" to "Underweight," lowering the target price from $118 to $115, maintaining a cautious stance on the residential builders sector for 2026 [5]. - Halozyme (HALO): Goldman Sachs downgraded the rating from "Neutral" to "Sell," setting a target price of $56, expressing concerns over the ambitious revenue targets set for 2041 [5]. - Fidelity National Information Services (FISV): JPMorgan downgraded the rating from "Overweight" to "Neutral," maintaining the target price at $85, indicating that 2026 will be a year requiring proof of execution [5]. Newly Initiated Ratings - United Airlines (UAL): Citigroup initiated coverage with a "Buy" rating and a target price of $132, citing a positive outlook for the airline industry [10]. - General Electric Aviation (GE): Susquehanna initiated coverage with a "Positive" rating and a target price of $350, noting its dominant position in the commercial aviation engine market [10][12]. - Hershey (HSY): Jefferies resumed coverage with a "Hold" rating and a target price of $181, acknowledging the company's strategies to manage cocoa cost pressures while noting high current valuations [10][13]. - Monday.com (MNDY): Guggenheim initiated coverage with a "Buy" rating and a target price of $250, indicating a potential 64% upside from current levels [10][13]. - Cava Group (CAVA): Truist initiated coverage with a "Buy" rating and a target price of $66, highlighting its leadership in the Mediterranean fast-casual dining sector [10][13].

Group 1 - Toast Inc (NYSE: TOST) has been upgraded by J.P. Morgan Securities to "overweight" from "neutral," driven by expectations of strong growth in the payments and fintech sectors, highlighting the company's pricing power and strong margins [1] - Currently, 12 out of 29 analysts rate Toast stock as a "hold," indicating potential for further upgrades that could provide additional support for the stock [2] - Toast's stock is trading below its year-to-date breakeven level and has decreased by 17.9% over the past 12 months, with recent gains testing the shares' 50-day moving average [2] Group 2 - The popularity of call options for Toast has increased, as indicated by a Schaeffer's put/call open interest ratio (SOIR) of 0.52, which is in the 16th percentile of its annual range [3] - Options for Toast are currently affordably priced, with a Schaeffer's Volatility Index (SVI) of 46%, which is higher than just 8% of all readings from the past year [3]