Toll Brothers (TOL) lifted at RBC on demand improvement

Toll Brothers (NYSE: TOL) shares were lifted to Outperform from Sector Perform by RBC Capital on Thursday, with analyst Mike Dahl raising the price target to $77 from $55 per share.

Dahl told investors in a research note that the firm is raising its FY'23E EPS expectations for the company to $10.90 from $8.73 and FY'24E to $10.25 from $6.61 due to demand improvement and margin resiliency.

TOL shares have jumped over 4% so far Thursday, trading above the $68 mark.

"We believe sentiment has been overly negative on a relative basis given TOL's high-end, West Coast, and build-to-order exposures, with recent trends providing evidence that it has experienced improvement similar to peers," the analyst wrote.

"We expect outsized order growth through 1Q'24 given easy comps, while we also view TOL's long land bank as providing a margin advantage."

In addition, the analyst stated that they now expect mid-teens ROTE through CY'24, making TOL's "relative valuation attractive."

By Sam Boughedda

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