Can You Trust Analyst Ratings for TOST? What the Data Actually Says

When browsing investment platforms, you’ll often see analyst consensus ratings on stocks. But here’s the uncomfortable truth: these recommendations don’t always point you toward the best investment opportunities. Let’s break down what Wall Street’s consensus actually means for Toast (TOST), and whether you should make investment decisions based on it alone.

The Hype vs. Reality Behind ABR Scores

Toast currently sits at an Average Brokerage Recommendation (ABR) of 1.79 on a 1-to-5 scale, where 1 represents “Strong Buy” and 5 means “Strong Sell.” On paper, this looks bullish. Out of 29 brokerage firms covering TOST, 17 assigned “Strong Buy” ratings (58.6%) and just one issued a “Buy” (3.5%).

But here’s where it gets interesting: research consistently shows that analyst recommendations suffer from a massive credibility problem. For every “Strong Sell” rating issued, brokerages hand out roughly five “Strong Buy” ratings. This isn’t accidental—it reflects institutional interests. Many analysts work for firms that profit from investment activity, creating an inherent bias toward positive recommendations.

Why ABR Can Be Misleading for TOST Investors

The consensus ABR for Toast suggests buying, but relying solely on this metric could backfire. Studies demonstrate that brokerage recommendations have minimal predictive power for actual stock price appreciation. The reason? Conflicts of interest run deep in the analyst community.

This doesn’t mean the ABR is useless—it’s just incomplete. Think of it as background noise rather than a buy signal. The real question investors should ask: what metrics actually predict stock movement?

A Better Tool: Understanding Zacks Rank vs. ABR

While both systems use a 1-to-5 scale, they measure completely different things. ABR relies purely on analyst sentiment (expressed as decimals like 1.79), while Zacks Rank operates on a quantitative model centered on earnings estimate revisions.

Here’s the key insight: earning estimate revisions have proven correlation with near-term price movements. When analysts collectively raise or lower earnings forecasts, stock prices typically follow. Because Zacks Rank continuously recalibrates across all five rating tiers proportionally, it avoids the heavy bullish bias plaguing traditional ABR scores.

Additionally, Zacks Rank updates dynamically as analysts adjust estimates. ABR, by contrast, can lag behind market-moving information.

What’s the Current Verdict on TOST?

Looking at Toast specifically, the Zacks Consensus Estimate for the current year has remained flat at $1.04 over the past month. This stagnant earnings outlook—combined with other estimate-related factors—has resulted in a Zacks Rank #3 (Hold) rating for TOST.

Translation: while Wall Street’s analysts maintain their optimistic Buy-equivalent stance through the ABR score, earnings expectations suggest the stock may simply move in line with the broader market. Caution might be warranted despite the bullish analyst consensus.

The Takeaway

Analyst ratings like Toast’s strong ABR score shouldn’t be dismissed outright, but they shouldn’t drive your investment decision either. Use them as a validation point for your own research, not as a standalone compass. Pairing ABR with earnings-driven tools like Zacks Rank gives you a more complete picture of where TOST stock might actually be headed.