Toll Brothers (TOL) Stock Forecast & Price Target

Toll Brothers has demonstrated resilient performance with an increase in foot and web traffic, which management regards as a positive indicator despite the traditionally slow time of year, suggesting robust buyer interest. The company expects to achieve growth in fiscal year 2026 at the lower end of the 7% to 10% range, which reflects ongoing demand conditions in certain markets. Furthermore, an elevated conversion rate from deposit to order at approximately 80% in the third quarter of fiscal 2025 significantly outpaces the historical average of 60%, underscoring the effectiveness of its sales strategy.

Toll Brothers has lowered its delivery expectations to 11,200 units, signaling potential challenges in maintaining sales momentum despite an average delivered price per home remaining stable between $950,000 and $960,000. The adjusted home sales gross margin has remained unchanged at 27.25%, raising concerns about profitability amid stagnant sales growth and controlled operating expenses, reflected in SG&A as a percentage of home sales revenues, which also remains steady at 9.4% to 9.5%. The flat trajectory of lumber and material prices, coupled with the luxury homebuilder's average price point exceeding $1 million, may limit its ability to compete effectively against entry-level builders, which could further strain financial performance in the long term.