Toll Brothers (TOL) Stock Forecast & Price Target

Toll Brothers, the leading luxury homebuilder in the U.S., has reported increased foot and web traffic at the start of F4Q25, which management views as encouraging despite the typical seasonal slowdown. The company anticipates growth in the range of 7% to 10% for FY26, even with some slower demand conditions in select markets, indicating resilience in its business model. Furthermore, a notable rise in the conversion rate from deposit to order, at approximately 80% compared to the historical average of 60%, suggests strong customer interest and an effective sales strategy.

Toll Brothers has lowered its delivery forecast to 11,200 units, down from a prior range of 11,200 to 11,600, indicating a potential decline in demand for luxury homes. Despite maintaining key financial metrics such as an average delivered price per home at $950,000 to $960,000 and an adjusted home sales gross margin of 27.25%, the unchanged selling, general and administrative expenses (SG&A) as a percentage of sales at 9.4% to 9.5% raise concerns about efficiency in cost management. Additionally, the flat trend in lumber and material prices, coupled with challenges at the premium price point of over $1 million, may hinder competitiveness against entry-level builders, further contributing to a cautious outlook for the company's financial performance.