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Fintech stocks underperformed due to harsh economic conditions

by Amy Johnson LLB Finance Reporter
15th Feb 24 11:13 am

In 2023, Fintech stocks underperformed because of harsh economic conditions. However, a late 2023 rally brought an oomph to many fintech companies.

Saqib Iqbal, a financial analyst at the Trading.Biz, analysed one such stock, which is down by 22%. He thinks it can jump to 25% in Q1. The company he is referring to is Toast (NYSE: TOST). It is a restaurant management software company.

  • The fintech sector has seen a late 2023 rally, and many companies are poised for an upside.
  • Toast (NYSE: TOST) is down by more than 22% since last year and presents a good opportunity.
  • The company’s strong fundamentals and improved economic conditions make the stock a “Buy Now.”

He says, “Amid current inflationary trends, many fintech companies have nosedived. Their stocks have plummeted, which makes some of them a good bargain. One such company is Toast. It is down by more than 22% since last year. However, since the start of 2024, it jumped by more than 9%, and the company’s growth potential says it can continue in an upward trajectory.”

During the uncertain macroeconomic backdrop, the company is aggressively increasing its operations and is well-positioned for long-term development.

In a recent earnings report, the business expressed a strong commitment to creating innovative products customized to various areas of the restaurant industry.

In particular, there was a lot of buzz around the recently announced ‘Toast Now’ app, intended to improve restaurant owners’ operational efficiency by delivering insights into performance statistics via mobile devices.

Toast’s (NYSE: TOST) Q3 performance was impressive, with the company having a free cash flow of $37 million. Revenue is expected to reach $1 billion to $1.03 billion in Q4, representing a 32% increase. The full-year estimate sees a 41% growth in sales, projected to rise around $160 million from the previous year.

Toast’s stock remains undervalued despite solid fundamentals, and Saqib thinks it can trade 25% above the current level in Q1 when combined with improved economic conditions.

NYSE: TOST stock analysis

Looking at the technicals, the stock is up by more than 9% since the start of 2024. It broke its resistance level on January 10 to trade above 199.94.

The next resistance for the stock lies at 22.88. If it can cross this level, the price can go towards 24.37, the level it saw in August 2023. That’s an increase of 25% from the current level.

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