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Goldman Sachs upgrades Toll Brothers stock to Neutral

Seana Smith and Madison Mills

Goldman Sachs has upgraded Toll Brothers (TOL) from Sell to Neutral and raised its price target from $112 to $ 124, arguing the homebuilder will benefit from outperformance in new home sales.

Yahoo Finance's Seana Smith and Madison Mills break down the call and how impending interest rate cuts could help the overall housing market.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Melanie Riehl

Video transcript

All right.

Well, Toll brother is also getting a bullish called this morning.

This time it's from Goldman Sachs.

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The firm upgrading the stock from sell to neutral.

So raising their price target from 100 and 12 bucks a share to 124.

Now, their argument is that the company is going to benefit from outperform in new home sales.

We have seen many of these home builders outperform here.

Many people who are out there are still in the market looking for homes.

Existing home market inventory remains extremely low.

New home sales are on our new homes are really the almost the only game in town for so many of those who are out there hunting for homes looking to purchase, maybe their new home are looking to move from their current location.

So again, many of these home builders getting that, seeing that demand and their real issue has been supply, meeting demand and their ability to do that in a timely fashion.

That's really been what has been coming up on the earnings calls here over the last several quarters.

And it's interesting.

This is another name.

We are sensing a little bit of a theme here of a company that's going to benefit from hopes about rate cuts moving forward and the impact that could have on the housing market.

I wonder if that is a little bit of the best buy story here as well.

The idea that home buyers and potential home buyers might get a little bit of relief as rates are starting to get priced in as potentially having some cuts this year that is leading to a lot of upward momentum in real estate stocks in general post CP I rallies.

So perhaps that is playing into this upgrade a little bit as well.

Shana.