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On Tuesday, Keefe, Bruyette & Woods adjusted their outlook on Toll Brothers , a company listed on the New York Stock Exchange under the ticker (NYSE:TOL). Analyst Jade Rahmani set a new price target for the home construction company’s stock at $132, a decrease from the previous target of $164. Despite this change, the firm maintained a Market Perform rating for the stock.
The revision follows Toll Brothers’ fiscal first quarter results, which Rahmani noted were slightly below expectations due to factors such as other income, impairments, and selling, general and administrative expenses (SG&A). The analyst also pointed out that while orders increased by 13% year-over-year, this was less than both Keefe, Bruyette & Woods’ projection of a 17% increase and the consensus estimate of a 21% rise.
Management’s comments on the mixed results seen during the current Spring selling season were also highlighted. Rahmani mentioned that the company’s stock is trading at a valuation of 1.2 to 1.4 times its current and forward book value. This places it 10% below its large-cap peers but still above the overall sector, which trades at 1.1 to 1.2 times book value. InvestingPro analysis reveals the company’s strong financial health, with a current ratio of 4.57 and moderate debt levels. InvestingPro subscribers have access to 15+ additional key insights about Toll Brothers’ financial position and market performance.
Rahmani emphasized the attractiveness of Toll Brothers’ shares given their valuation, but also noted the prevailing uncertainty in the market. The analyst chose to maintain the 2026 earnings estimate while slightly reducing the 2025 earnings estimate by 1%, attributing the adjustment to the timing of deliveries and other income.
The report from Keefe, Bruyette & Woods provides investors with an updated perspective on Toll Brothers’ financial outlook, reflecting both the recent performance and the analyst’s expectations for the company’s future amidst a fluctuating real estate market.
In other recent news, Toll Brothers reported its first-quarter 2025 earnings, revealing a miss on both earnings per share (EPS) and revenue forecasts. The luxury homebuilder posted an EPS of $1.75, falling short of the expected $2.04, with revenue coming in at $1.84 billion compared to the anticipated $1.91 billion. Despite the miss, Toll Brothers maintained its full-year guidance, projecting deliveries between 8,600 and 11,400 homes with an average delivered price of $945,000 to $965,000. The company also anticipates an adjusted gross margin of 27.25% and targets $500 million in share repurchases.
Additionally, Citi analyst Anthony Pettinari adjusted the price target for Toll Brothers shares, reducing it to $123 from $137, while maintaining a Neutral rating. This revision reflects a decrease in fiscal year 2025 earnings estimates due to softer demand and higher inventories in certain markets. RBC Capital Markets also adjusted its outlook on Toll Brothers, cutting the price target to $139 from $142 and maintaining an Outperform rating. Analysts noted skepticism regarding Toll Brothers’ guidance for the first and second quarters due to mixed demand signals.
Despite these concerns, RBC Capital highlighted Toll Brothers’ strong gross margin percentage, supported by the company’s robust land position and affluent customer base. The firm acknowledged that Toll Brothers is relatively better positioned to navigate housing market challenges compared to its peers. Toll Brothers plans to reduce speculative starts in response to market conditions, although the impact on fiscal year 2025 results may be limited due to existing backlogs. The company anticipates an improvement in gross margins for the second quarter, driven by a higher number of luxury deliveries.
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