Toll Brothers’ focus on luxury homes positions it for outperformance, said Truist. The investment firm initiated the homebuilder at a buy rating and $190 price target, implying upside of 24%. Analyst Jonathan Bettenhausen called Toll Brothers as a value play. He said that the company’s emphasis on the luxury market differentiates it from competitors, while its higher price point has also helped boost Toll Brothers to category leader status. TOL 1Y mountain TOL 1Y chart “TOL is undervalued compared to our view of future ROE potential. The company is uniquely positioned to benefit from any greenshoots in the resilient luxury home market in 2027,” he said. “We think that the company is somewhat insulated from the affordability issues facing low end builders and TOL faces very limited national competition at the luxury price point. Given this, we think the company will continue to deliver relatively consistent results in a challenging market.” The analyst added that while some investors have steered away from Toll Brothers in favor of plays on the lack of affordable home supply, the luxury market has consistently proven itself as resilient among the current macroeconomic backdrop. For instance, buyers at the $1 million price point are less impact from more expensive financing versus first-time entry-level buyers, he wrote. “We think this has created a valuation dislocation opportunity for patient investors, as we are modeling the stock will meaningfully over-perform,” he added. Bettenhausen predicts that 2026 will be a contraction year for homebuilder revenues, with unit declines also impacting some names. However, he believes that demand will rebound in 2027 thanks to an incrementally more optimistic consumer. “Overall, we think the structural undersupply of homes in the U.S. is constructive to longer term growth in the industry,” he wrote. Shares of Toll Brothers have added 14% this year and 42% over the past 12 months.
