On Monday, Keefe, Bruyette & Woods adjusted their price target for Berkshire Hathaway Inc . (NYSE:BRKa) (NYSE: BRK-A), increasing it to $660,000 from the previous $645,000. The firm has maintained a Market Perform rating on the stock. This revision follows the company's first-quarter earnings, which surpassed expectations mainly due to a higher-than-anticipated underwriting profit, other income, and a lower-than-expected tax rate. These positive factors were slightly balanced by weaker-than-forecasted returns in insurance investment income, as well as in the Manufacturing, Service and Retailing, and Railroads, Utilities, and Energy segments.
Berkshire Hathaway's operating earnings per share (EPS) for the first quarter of 2024 amounted to $7,796, which exceeded the Street's $6,702 estimate and outperformed Keefe, Bruyette & Woods' own forecast of $6,388. The outperformance was attributed to a significant margin improvement at GEICO, a subsidiary of Berkshire Hathaway, which specializes in auto insurance. The analyst anticipates that the earnings beat, along with ongoing share repurchases, will provide a lift to Berkshire Hathaway's shares, although the momentum may be slightly restrained by softer earnings in non-Insurance business areas.
In light of the first-quarter results, Keefe, Bruyette & Woods has revised its EPS estimates for Berkshire Hathaway for the years 2024 and 2025. The new estimates are $27,250 and $28,800, respectively, up from the previous forecasts of $25,345 and $28,000. These updated figures incorporate the strong first-quarter performance and take into account expectations for higher insurance income, balanced against projections for lower income in non-insurance sectors.
The firm's decision to raise the 12-month target price for Berkshire Hathaway reflects the company's solid performance in the first quarter and expectations for continued earnings strength. The Market Perform rating suggests that while the firm acknowledges Berkshire Hathaway's solid results and prospects, it views the stock as adequately valued at the current levels in relation to market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.