Raymond James Cuts Toll Brothers

Says housing markets in the Mid-Atlantic are deteriorating

Raymond James cut its rating on Toll Brothers (TOL ) to market perform from outperform.

Analyst Rick Murray cited deteriorating fundamentals in the company's core Mid-Atlantic markets as well as lower fiscal year 2006 and fiscal year 2007 earnings per share expectations. He raised his $4.52 fiscal year 2005 (ended October) earnings per share estimate to $4.60, based on stronger-than-expected closing in the quarter. However, he cut his $5.70 fiscal year 2006 earnings per share estimate to $5.40 and his $6.50 fiscal year 2007 estimate to $5.80. He noted this second negative revision to his estimates in the past two quarters. He says that given his view of slowing fundamentals and lower earnings per share growth expectations going forward, he believes it's difficult to keep the previous outperform rating.