Luxury homes builder Toll Brothers, Inc. (TOL) recently announced that it has acquired Las Vegas-based homebuilder StoryBook Homes. The financial terms of the deal have been kept under wraps.
Following the news, shares of the company declined marginally to close at $60.30 on Wednesday.
With this buyout, Toll Brothers will gain a strong foothold in the growing Las Vegas housing market. Post the buyout, the founders and employees of StoryBook will continue to remain with the company and work under the StoryBook Homes brand.
The Group President of Toll Brothers, Gary Mayo, said, “This acquisition presents an exciting opportunity to quickly add to our already fast-growing Las Vegas operations, while further diversifying our new home offerings and price points in the market. StoryBook Homes is a quality homebuilder with a great reputation, a talented team, excellent gross margins, and a strong land position.” (See Toll Brothers stock chart on TipRanks)
Last month, Goldman Sachs analyst Susan Maklari reiterated a Sell rating on the stock. The analyst, however, lowered the price target from $59 to $55, which implies 9.2% downside potential from current levels.
According to Maklari, the homebuilding industry faces headwinds from seasonality and more challenging comparisons. As a result, the analyst believes the homebuilder stocks will remain range-bound.
Consensus among analysts is a Hold based on 3 Buys, 2 Holds and 3 Sells. The average Toll Brothers price target of $70.71 implies upside potential of 16.8% from current levels. Shares have gained 53.1% over the past year.
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