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The firm expects Toast to achieve a steady ~25% growth rate, with potential for higher growth from increased penetration, expansion into new sub-verticals, international markets, and strategic acquisitions.
Although the company is currently unprofitable, the firm appreciates its long-term financial targets of achieving 30-35% EBITDA margins. According to Deutsche Bank, the launch of new products and improving attach rates should help offset take rate headwinds and improve the company’s path to profitability.
The firm estimates that Toast captured approximately 10.3% of US restaurant spending in 2022, and it will increase to around 15.4% by 2024.
Deutsche Bank also initiated coverage on Marqeta Inc. (MQ) with a Buy rating and a price target of $7.00.
With embedded finance being a rapidly growing trend in fintech, the firm believes Marqeta is well-positioned to take advantage of this opportunity for non-traditional fintech.
In Q4/22, there was a significant surge in demand for the company’s services, and Deutsche Bank anticipates strong growth in bookings for Q1 and the full year of 2023. This will enable the company to diversify its revenue streams and concentration away from its deep relationship with fintech leader Block (approximately 74% of Marqeta’s Q4/22 revenues) and start a path toward profitability.
By Davit Kirakosyan
