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On Thursday, Oppenheimer increased its price target for Toll Brothers (NYSE:TOL) shares to $168 from $157, while maintaining an Outperform rating.
The adjustment follows the firm's update to its model for Toll Brothers' fiscal third-quarter 2024 earnings, with a new forecast for fiscal year 2024 earnings per share of $14.63, up from the previous estimate of $13.97.
Toll Brothers, recognized for its luxury homebuilding, has been identified as a top pick within Oppenheimer's coverage. The company's ongoing demand for its homes will lead to conservative guidance for the fourth quarter.
The firm also notes Toll Brothers' strategic shift toward constructing spec homes—houses built before a buyer is secured—which is anticipated to expedite volume growth through 2025.
Additionally, the analyst highlights a potential catalyst for Toll Brothers that the market may not fully appreciate. The company could alter its capital allocation strategy, potentially doubling its stock buyback program in the next year. This move could significantly boost shareholder value.
The updated price target reflects the analyst's confidence in Toll Brothers' growth trajectory and the company's ability to outperform within the market. Toll Brothers' shift in strategy and robust demand for its luxury homes are central to the analyst's positive outlook.
In other recent news, Toll Brothers has reported impressive third-quarter results, surpassing analyst estimates. The luxury homebuilder's earnings per share reached $3.60, notably exceeding UBS's estimate of $3.23 and the consensus of $3.35.
The company's revenue stood at $2.72 billion, outperforming UBS's projection of $2.68 billion and the consensus of $2.71 billion. Despite a year-over-year growth in orders of 10.9% in the third quarter, which fell short of UBS's expectations, the performance was deemed solid given the mortgage rate volatility.
UBS reiterated its Buy rating on Toll Brothers stock, with a sustained price target of $154.00. Toll Brothers has raised most components of its financial outlook for the fiscal year 2024 and increased its share buyback expectations from $500 million to $600 million. These developments reflect recent activities within the company.
InvestingPro Insights
Following Oppenheimer's favorable outlook on Toll Brothers, InvestingPro data further substantiates the company's robust financial position. With a market capitalization of $14.24 billion and a P/E ratio that stands at 9.61, Toll Brothers presents as a well-valued company in the current market. The company's commitment to shareholder returns is evident, as it has raised its dividend for 3 consecutive years and maintained dividend payments for 8 consecutive years, showcasing a stable financial policy.
InvestingPro Tips reveal that analysts are optimistic about Toll Brothers' future earnings, with 4 analysts revising their earnings upwards for the upcoming period. This aligns with the positive sentiment expressed by Oppenheimer. Additionally, the company has demonstrated a significant return over the last week, with a 9.36% price total return, and maintains a strong performance over longer periods, including an 87.41% return over the past year.
For investors seeking more detailed analysis and additional insights, there are 15 InvestingPro Tips available on https://www.investing.com/pro/TOL, which could provide a deeper understanding of Toll Brothers' market position and future potential.
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