Toll Brothers Stock A Buying Opportunity Amid Rising Mortgage Rates: Analyst

Wedbush analyst Jay McCanless upgraded Toll Brothers, Inc. TOL to Outperform from Neutral, raising the price forecast to $175 from $148.

The analyst indicates that the recent dip in the company’s shares due to rising mortgage rates has created a buying opportunity.

With the stock market recently reaching all-time highs, this could positively influence demand. Additionally, the analyst notes recent positive demand commentary from Toll’s publicly traded competitors.

McCanless points out that the average Toll buyer is less focused on monthly payments compared to most of the stick builder coverage. Instead, these buyers are more attuned to their personal financial situations.

For the fourth quarter of fiscal 2024, the analyst raised the unit closing estimate to the upper end of Toll’s range of 3,275 to 3,375 units, though there may be some hurricane-related risks associated with this higher estimate.

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However, the overall impact of Hurricanes Milton and Helene appears to have been minimal.

For fiscal year 2025, the housing gross margin has been raised to 26.8% from 26.7%, based on the anticipated continuation of pricing power, the analyst adds.

The analyst raised the FY25 revenue estimate to $10.735 billion from $10.670 billion and the FY25 EPS estimate to $15.00 from $14.86.

Price Action: TOL shares are trading lower by 1.11% to $149.04 at last check Friday.

Photo by Sundry Photography via Shutterstock

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