Updated
Updated · CNBC · Jun 9
KBW Upgrades Toll Brothers, Downgrades Lennar as $161 Target Signals 17% Upside
Updated
Updated · CNBC · Jun 9

KBW Upgrades Toll Brothers, Downgrades Lennar as $161 Target Signals 17% Upside

1 articles · Updated · CNBC · Jun 9

Summary

  • KBW lifted Toll Brothers to outperform and cut Lennar to underperform, setting a $161 target on Toll for 17% upside and an $86 target on Lennar for a 5% downside from Monday's close.
  • Rahmani said the split reflects a K-shaped housing market: affluent buyers are holding up, while entry-level demand is strained by high mortgage rates, weak confidence and an uncertain job market.
  • Lennar, with about 50% of its mix in entry-level homes, may need to keep heavy incentives such as sub-4% mortgage buydowns, while inflation could limit margin relief.
  • Toll Brothers is expected to post 6% to 8% order growth in 2026-2027 with stable gross margins, helped by high-FICO buyers, larger down payments, cash purchasers and upgrade spending.
  • The divergence is already showing in shares: Lennar is down nearly 12% in 2026 versus Toll's roughly 1.5% gain; premarket, Toll rose 1.7% while Lennar slipped 0.3%.

Insights

Can Lennar's tech and land-light strategy overcome the economic squeeze on first-time homebuyers?
Are massive builder incentives a historic buying opportunity or a warning sign of a looming market downturn?
As the economy splits, is the luxury housing boom a sustainable trend or a bubble about to burst?