Toll Bros. (TOL) PT Raised to $135 at Wolfe Research

Wolfe Research analyst Truman Patterson raised the price target on Toll Bros. (NYSE: TOL) to $135.00 (from $123.00) while maintaining a Outperform rating.

The analyst comments "Year-to-date, TOL’s equity has increased +16%, outperforming the Homebuilder group’s +4% gain and 11% S&P advance. In 2023, TOL’s equity gained +106%, outperforming the group’s +81% and the S&P’s +24%. TOL’s equity is currently trading at $119.20 compared to a YTD high of $134.92 and low of $95.98. The equity currently trades at 8.3X our ’24 EPS estimate, which is 14% above the company’s trailing 5-year average of 7.3X (9.7X-5.0X range), but 23% below the 10.8X long-term average. The equity trades at 1.6X our F24 BV estimate and 1.4X our F25 estimate comparing to the trailing 5-year 1.0X average (0.7X to 1.3X) and 1.4X long-term average. As long as TOL continues demonstrating that its Margin profile, and hence, returns profile, has moved structurally higher versus preCOVID levels, we believe the equity should trade at the high end or above its 5-year averages. Based on historical correlations, we find that TOL’s projected ’24 ROA of 11.7% implies a 1.8X BV multiple. Our $135 price target implies a 1.8X multiple, inline with the implied multiple based on our ’24 ROA estimate."

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