Toll Brothers (TOL) is likely to report fiscal Q2 earnings per share in line with consensus, but may reduce its full-year 2025 closings outlook as demand during the spring selling season showed signs of softness, Oppenheimer said in a research note Thursday.

The firm now models 10,900 home closings for the year, below the company's midpoint guidance of 11,400, reflecting a more volatile macro environment rather than company-specific issues. Oppenheimer expects revenue to decline 1% in 2025 and fall another 4.5% in 2026.

Gross margins are projected to remain stable around 27% for the year, supported by a favorable mix in H2 and a focus on pricing over pace. However, the firm noted increased promotional activity as Q2 progressed and cited industry-wide pressure, with other builders guiding to average gross margin declines of around 100 basis points in the June quarter.

Despite an expected slowdown in Q2 orders, the brokerage believes that Toll Brothers is positioned to grow closings in 2026, aided by a spec-heavy business mix, a nearly 10% increase in community count this year, and solid inventory levels.

Oppenheimer reiterated its outperform rating on the stock and lowered its price target to $155 from $165.

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