BB&T Captial upgraded Toll Brothers (TOL

) to strong buy from buy.

On Wednesday the homebuilder posted $1.19, vs. 93 cents fourth-quarter earnings per share. Analyst John Kasprzak says the homebuilder earlier discussed fourth-quarter closings and orders, so outperformance, vs. his estimate, is mainly due to better-than-expected homebuilding gross margin, which rose 120 basis points.

Toll Brothers' management said demand for product is strong; market by market, there's been little change from recent trends. He says the company has shrugged off possible interest-rate increase concerns, indicating strong demand and supply constraints should make for continued robust sales and higher prices.

Kasprzak raised the $4.05 fiscal 2004 (Oct.) earnings per share estimate to $4.15, and sees $5.00 for fiscal 2005. He also raised his $45 target to $50.