Stock Groups

Pulte, Toll Brothers Gain on Double Upgrade from BofA -Breaking

by Mike Robinson

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© Reuters.

By Dhirendra Tripathi

Investing.com – PulteGroup, Inc. (NYSE:) and Toll Brothers, Inc. (NYSE:) traded around 1% higher Monday after getting a double upgrade from Bank of America Securities (NYSE:) due to favorable risk-reward profile.

The brokerage is now rating the homebuilders ‘buy’ from ‘underperform’ earlier.

BofA maintained its target for Pulte at $58, over 22% higher than the stock’s current price of $49. Toll Brothers The current price of the stock is $63, 17% above its $54 value. Analyst Rafe Jadrosich had previously set a $61 target for the stock.

Pulte announced recently a $1 Billion share buyback program.

Jadrosich says that fundamentals and industry tailwinds are strong in spite of recent increases in interest rates.

Pulte is currently trading at a discount in price-to-book relative its return-on equity compared with peers, while Toll Brothers has a slightly premium. The analyst added that they should both outperform their peers.

Jadrosich pointed out that roughly 75% of Toll’s land was purchased pre-pandemic (~3 year supply) and should provide a long runway for healthy margins.

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