Wall Street Bulls Look Optimistic About Toast (TOST): Should You Buy?

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 research tools like the Zacks Rank to make informed investment decisions [1][5]. Brokerage Recommendations for Toast - Toast has an average brokerage recommendation (ABR) of 1.77, indicating a consensus between Strong Buy and Buy, based on recommendations from 30 brokerage firms [2]. - Out of the 30 recommendations, 18 are classified as Strong Buy, accounting for 60% of the total recommendations, while one is classified as Buy, making up 3.3% [2]. Limitations of Brokerage Recommendations - The article highlights that relying solely on brokerage recommendations may not be wise, as studies show limited success in guiding investors towards stocks with the best price increase potential [5]. - Analysts from brokerage firms often exhibit a strong positive bias due to vested interests, issuing five "Strong Buy" recommendations for every "Strong Sell" [6][11]. Zacks Rank as a Reliable Indicator - The Zacks Rank, which classifies stocks into five groups based on earnings estimate revisions, is presented as a more reliable indicator of a stock's near-term price performance compared to ABR [8][12]. - The Zacks Rank is timely and reflects changes in earnings estimates quickly, unlike the ABR, which may not always be up-to-date [13]. Current Earnings Estimates for Toast - The Zacks Consensus Estimate for Toast's current year earnings remains unchanged at $1.04, indicating steady analyst views on the company's earnings prospects [14]. - Due to the unchanged consensus estimate and other factors, Toast has received a Zacks Rank of 3 (Hold), suggesting caution despite the Buy-equivalent ABR [15].