UPDATE: JP Morgan Downgrades Toll Brothers to Underweight on Limited Upside

JP Morgan lowered its rating on Toll Brothers

from Overweight to Underweight on valuation concerns, but raised its price target from $30 to $31.50. JP Morgan commented, "We are downgrading TOL to Underweight from Overweight, as the stock's current valuation against its longer term earnings power results in limited upside from current levels, in our view. While we remain bullish on TOL's prospects and continue to expect mostly average to above average fundamental performance, our downgrade is neither a reflection of increased concerns regarding TOL's higher-end customer focus nor an outlook for the company's fundamental performance to soften over the next 18 months. However, we believe current valuation more than reflects the company's positive fundamentals and is particularly expensive on a P/E basis." Toll Brothers closed at $30.58 on Wednesday.