Toll Brothers (TOL) Stock Forecast & Price Target

Toll Brothers is positioned to outperform because its luxury, move-up focus serves affluent buyers with greater income, equity, and cash-buyer flexibility, making demand more resilient than entry-level housing in a higher-rate environment. Its fundamentals remain strong, with $2.65 billion in recent home sales revenue, 25.6% adjusted gross margin, 17% EBITDA margin, and 14.4% return on equity, while returns to stockholders reached about $231 million and repurchase plans were raised to $700 million. The company also has a strong land pipeline and expanding community count, supporting continued growth potential even as fiscal 2027 delivery expectations of 10,552 homes imply only a modest decline in units and revenue.

Toll Brothers is facing a softer operating backdrop despite modest contract growth, as July 31, 2026 net contracts rose only 5% in units to 2,508 while deliveries fell 10% to 2,662 and home sale revenue declined 8% year over year. Profitability is weakening because gross margin slipped to 23.9% and operating margin to 14% as incentives and higher selling and administrative expenses pressured results, even though the average sales price held near $996,000 to $1.0 million. The outlook remains negative because high mortgage rates, affordability constraints, land-cost inflation, and geographically mixed demand could keep volumes and margins under pressure while the broader housing market remains vulnerable.