MKM Partners analyst Megan McGrath lowered her price target on Toll Brothers to $53 after its Q2 earnings miss, saying his revised outlook also accounts for expectations of "slower community count growth this year as well as lower gross margin expectations next year." The analyst adds that while the management has indicated that higher interest rates are not impacting demand, she is increasingly concerned with the impact of rising rates and costs. McGrath keeps her Buy rating however, noting that Toll Brothers can show some resiliency with improving margins in the second half of the year if interest rates can stabilize.

Bullish option flow detected in Toll Brothers with 1,008 calls trading, 1.1x expected, and implied vol increasing over 1 point to 37.16%. 4/26 weekly 115 calls and 4/26 weekly 114 calls are the most active options, with total volume in those strikes near 320 contracts. The Put/Call Ratio is 0.54. Earnings are expected on May 21st.