Berkshire Hathaway Analyst Raises Forecasts After Q1 Results — But Remains Cautious

Berkshire Hathaway Inc BRK BRK shares have climbed steeply year-to-date, but have lost close to 4% over the past month.

The company's recent earnings beat was driven mainly by GEICO's significant margin expansion, according to Keefe, Bruyette & Woods.

The Berkshire Hathaway Analyst: Meyer Shields maintained a Market Perform rating on Berkshire Hathaway while raising the price target from $645,000 to $660,000.

The Berkshire Hathaway Thesis: While the company reported its first-quarter operating earnings at $7,796 per share, surpassing Street expectations of $6,702 per share, this was tempered by soft non-Insurance earnings, Shields said in the note.

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"NEP of $21.5 billion (+8.5% y/y) just missed our $21.6 billion estimate and investment income of $3.16 billion (up 32.3% y/y) missed our $3.39 billion forecast, but the $3.3 billion underwriting gain solidly beat our $2.6 billion estimate," the analyst wrote.

"The headline beat reflected strength in Insurance (including robust growth excluding GEICO) and consistent share repurchases, tempered by near-term caution on non-Insurance earnings," Shields added.

Shields raised his earnings estimates for 2024 and 2025 from $25,345 per share to $27,250 per share and from $28,000 per share to $28,800 per share, to reflect the latest beat as well as "assuming higher insurance but lower non-insurance income."

He stated, however, that the stock seems to fully reflect the company's earnings prospects, "especially given its unique management succession risks."

BRK-A, BRK-B Price Action: Shares of Berkshire Hathaway had risen by 0.66% to $606,997 at the time of publication on Monday.

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