Toll Brothers Stock Builds on Earnings Beat

Wedbush hiked its price target, and more bull notes could be on the horizon

Deputy Editor
Aug 26, 2020 at 9:06 AM
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Toll Brothers Inc (NYSE:TOL) is up 1.3% at $46.65 this morning after the homebuilder's fiscal third-quarter profits and revenue exceeded analysts' estimates. The company benefited from record-low mortgage rates, reporting a 26.4% jump in orders to 2,833 homes, also beating out estimates.

Wedbush hiked its price target to $53 from $45 in response. More bull notes could be on the way, too, especially considering TOL's 29% year-over-year gain. Coming into today, the 12-month consensus price target of $39.15 was a near 15% discount to current levels. Plus, just four of the analysts covering Toll Brothers consider it a "buy" or better, while six say "hold," and three say "sell" or worse. 

Option traders have taken a slightly more optimistic stance. In the past 10 days, 5.59 calls were picked up for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 92% of readings from the past year, suggesting this appetite for long calls is unusual. 

These traders are likely cheering today's earnings beat. The equity is heading for its fifth straight win, and a fresh six-month high. The stock has seen a solid run up the charts since its March selloff, with an early June pullback saved by the 100-day moving average, pushing TOL to a three month lead of over 53%. 

 

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