Toll Brothers (TOL) is one of the "most compelling" companies in the homebuilding sector amid its "underappreciated earnings power," Oppenheimer said in a note emailed Thursday.

The firm said it sees an upside EPS case of $13.77 for the company backed by higher profitability and share buybacks in 2026.

Meanwhile, a "more normal demand backdrop" may also lead to a bull case EPS of $18.34 and the company's share price could rise to the $220 range, the note said.

Oppenheimer also said it sees the company reaching 26.7% gross margin, above the company's guidance and Oppenheimer estimate of 26%, as the company "historically guides conservatively, beating its outlook by 60 bps on average the past 32 quarters."

Oppenheimer reiterated Toll Brothers' outperform rating and $155 price target.

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