UPDATE: Sterne Agee Initiates Toll Brothers at Underperform; Current Valuation is Full

Sterne Agee initiated coverage on Toll Brothers TOL with an Underperform rating and a $29.00 price target. Sterne Agee analyst Jay McCanless commented, "TOL reported F1Q13 (FY ends in October) EPS of $0.03 on February 20 which was $0.08 below consensus estimates. We view management's guidance on the F1Q13 call for sequential declines in gross margins and backlog absorption into F2Q13 as a reason for conservativeness in our outlook. TOL shares have risen 4.6% since the release versus a 2.6% gain for the S&P 500 and an approximate 11.0% gain for the peer group. We anticipate TOL lags the peer group for an extended period since we do not foresee a positive catalyst until 2014." Toll Brothers closed at $34.23 on Wednesday.