UPDATE: ISI Group Upgrades Toll Brothers to Buy, Assigns $38.50 PT

In a report published Monday, ISI Group upgraded its rating on Toll Brothers

from Hold to Buy and assigned a $38.50 price target. ISI Group noted, “In conjunction with ISI Group's adoption of a changed ratings system, we are assigning an upgraded Buy rating to TOL, with a Price Target of $38.50, implying roughly 15% upside over the next year, while our new Buy rating in the system targets 10% to 20% appreciation. Our prior rating was Hold. Over the past year, we've struggled with this equity's high valuation and strong performance, given its rather mundane operating performance the first half of the year. However, over the last quarter plus, the equity has done very little while the group significantly outperformed. Combining that dynamic with a step-change fundamental performance, gives us the opportunity to be more aggressive on the equity. The equity trades at a discount to the group on some metrics, while others are basically on par with the group. We believe TOL's strong order growth, rapidly rebounding margins and its unique position allowing for continued market share gains, argues very easily for a 10% to 15% premium to the group.” Toll Brothers closed on Friday at $33.66.