Toll Brothers Is Poised For Growth, Says Argus

On Thursday Argus Research issued a company note on Toll Brothers Inc.

as the company expects solid demand for their home deliveries in 2016. Currently, Argus rates Toll Brothers as a Buy with a $43 price target. Chris Graja, an analyst at Toll Brothers, wrote, "Toll is the largest homebuilder serving the luxury market. We believe that Toll's access to capital is an advantage over small and mid-sized builders that are privately owned. The company's strength could have additional value in an environment where very selective lenders serve the homebuilding industry...We continue to expect strong revenue and earnings growth to drive share price appreciation over the next 2 years." Argus highlighted several key catalysts for the company heading into 2016: 1. Demand: Toll Brothers has a committed backlog of orders worth $3.5 billion with an average home price of $850,000. 2. Profitability: The homebuilder's gross margin increased by 50 basis points to 26% which was driven primarily by more efficient business operations. 3. Customer strength: Toll Brother's customers tend to be more affluent consumers which allow them to have low risks of defaulting on loans and have access to large amounts of capital. Having excess cash will allow customers to spend more on highly profitable upgrades to their home selection. Toll Brothers last traded at $32.13.