Evercore ISI downgraded Toll Brothers (TOL) to In Line from Outperform with a price target of $160, down from $169. Homebuilder stocks rallied this summer in anticipation that falling mortgage rates would stimulate a rebound in housing demand and a bottoming in fundamentals, but a meaningful demand response has not yet emerged despite modestly improved affordability, the analyst tells investors. The firm believes margins must bottom before homebuilder stocks can rerate and it does not believe that this will happen in the next several months, driving its downgrades of a number of stocks in the sector.
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