Toll Bros. Sees Revenue Plunge -- But Wins Analyst Upgrade

Homebuilder Toll Brothers on Wednesday announced that it expects to post a 22 percent drop in first-quarter home-building revenue.

The top U.S. luxury builder said home-building revenue was $842.7 million for the three months ended Jan. 31, down from $1.09 billion in the year-ago quarter.

Toll Brothers is slated to release final figures for the quarter on Feb. 27.

The company said it also expects to take $150 million to $300 million in quarterly writedowns of land and land options.

"The housing market remains very weak in most areas," Robert I. Toll, chairman and chief executive, said in a statement.

He added, "Based on current traffic and deposits, we are not yet seeing much light at the end of the tunnel."

But Banc of America sees at least a dim ray: it upgraded its rating of Toll Brothers to "neutral" from "sell."

"We continue to think Toll needs to lower prices more aggressively near-term to regain volume and work through its long land supply," Banc of America Securities analyst Daniel Oppenheim said in a research note.

And sector investors should take note: It also upgraded rivals Pulte Homes and KB Home to "buy" from "neutral."