UPDATE: Goldman Sachs Resumes Coverage on Toll Brothers with Buy Rating, $37 PT on Good Market Position

In a report published Monday, Goldman Sachs analyst Eli Hackel resumed coverage on

with a Buy rating and $37.00 price target. In the report, Goldman Sachs noted, “We resume coverage of Toll Brothers with a Buy rating, as we believe the company is ideally positioned in the luxury homebuilding market and we expect Toll to gain market share while expanding margins during the next few years. We expect the smoothest and most sustained homebuilding recovery in the luxury homebuilding market, as the high-income homebuyer has the purchasing power to participate in the housing recovery while not being as affected by the ‘difficulties' in the mortgage market. While all builders gained market share during the downturn, we expect Toll's share gains to continue the longest and to be the most durable. Small private builders in the luxury segment were most affected during the downturn, and given the barriers to entry, should take the longest to return to the market. We also like Toll's large land banks. While most builders will increase their land spend during the recovery, Toll can afford to be more opportunistic in its acquisition efforts, leading to higher margin expansion. Our $37, 12-month target price implies 17% upside from current levels.” Toll Brothers closed on Friday at $31.70.