Toast's (TOST) built-in financing program, called Toast Capital, has the potential for "greater" contributions to earnings per share over time, UBS Securities said in a Thursday note.

The company could expand Toast Capital closer to its point-of-sale industry peers, with its potential for increased lending penetration assuming stable gross profit take rates and credit performance, the brokerage said.

Toast Capital's held-for-investment loans are estimated to retain the "highest economics," followed by credit risk transfers, and then forward flow, UBS said. The held-for-investment loans have full interest income recognition, but the company expects credit risk transfers to be the main funding source over time, according to the investment firm.

UBS Securities has a buy rating on Toast, with a a $39 price target.

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