Spring housing sales off to 'robust' start, analyst says; recommends Toll, Lennar

Key Points
  • Raymond James raised its price targets and reiterated its strong buy ratings on Toll Brothers and Lennar.
  • The firm cited February U.S. Census Bureau data, which showed orders for new homes costing more than $750,000 "nearly tripled." Luxury homebuilders like Toll Brothers should benefit from the trend, according to analyst Buck Horne.
A contractor works on the basement of a home under construction in the Toll Brothers Regency at Palisades community in Charlotte, N.C.
Luke Sharrett | Bloomberg | Getty Images

Investors should buy homebuilder shares such as Toll Brothers and Lennar because housing sales are surging this spring, according to Raymond James, which reiterated its strong buy ratings on both stocks.

"The 2017 spring selling season is off to a robust and better-than-expected start for most U.S. homebuilders, based on several recent data points and our own feedback received from our travels this spring," analyst Buck Horne wrote in a note to clients Thursday.

"Accordingly, ahead of the upcoming 1Q17 earnings season, we are upwardly revising and updating EPS estimates and target prices across our homebuilding coverage list."

February pending homes sales rose 5.5 percent for the month, the second-fasted pace in more than 10 years, according to the National Association of Realtors. In addition, home sales increased about 9 percent in March compared with the previous year, according to a new report from Redfin.

More In Pro News and Analysis

CNBC ProHere are Wednesday's biggest analyst calls of the day: Netflix, JetBlue, Disney, Coinbase & more
CNBC ProA couple major analysts see a winning trade in Apple ahead of earnings
CNBC ProBerenberg says rising inflation is here to stay — and names the stocks to play it