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UBS lifts Berkshire Hathaway stock price target on improved outlook

Published 04/19/2024, 11:22 PM
© Reuters.

On Friday, UBS increased its price target for Berkshire Hathaway Inc . (NYSE:BRKa) (NYSE:BRK-B) to $481 from $477, while maintaining a Buy rating on the stock.

The firm's analyst cited enhancements in GEICO's underlying loss ratios and increased volumes at BNSF Railway as key reasons for the adjustment.

The revised price target follows UBS's updated first-quarter earnings per share (EPS) estimate for Berkshire Hathaway's Class B shares, which has been raised to $4.90 from $4.65. The EPS estimate for Class A shares has also been increased, from $6,979 to $7,356. These changes reflect the analyst's positive outlook based on recent performance trends in the insurance and railroad sectors.

Looking ahead to the full year of 2024, UBS has adjusted its EPS projection for the Class B shares to $19.77, up from the previous estimate of $19.15. For Class A shares, the 2024 EPS projection has been lifted from $28,725 to $29,655. These projections point to a robust financial performance for Berkshire Hathaway in the coming year.

In terms of book value per share (BVPS), UBS is projecting a figure of $396,447 for Class A shares and $264.08 for Class B shares at the end of the first quarter of 2024. This would represent an approximate 1.8% sequential growth in BVPS, signaling a healthy increase in the intrinsic value of the company.

The optimistic adjustments by UBS reflect the firm's confidence in Berkshire Hathaway's near-term financial prospects, underpinned by the company's strong performance in its insurance and railroad operations.

InvestingPro Insights

Following UBS's positive revision of Berkshire Hathaway Inc.'s (NYSE:BRK-B) price target and EPS estimates, current metrics from InvestingPro provide additional context to the company's financial health and market performance. With a robust Market Cap of approximately $580.45 billion and a Price/Earnings (P/E) Ratio on a trailing twelve months basis as of Q4 2023 standing at 9.04, Berkshire Hathaway presents a picture of a stable giant in the financial landscape.

The company's Revenue Growth over the last twelve months as of Q4 2023 is notably strong at 20.68%, which complements UBS's outlook on Berkshire's insurance and railroad sectors. This growth is further supported by a solid Gross Profit Margin of 33.8%, highlighting the company's ability to translate sales into profits efficiently.

An InvestingPro Tip that aligns with UBS's analysis is the company's status as a prominent player in the Financial Services industry, which is reflected in its considerable operating income of $123.2 billion over the last twelve months as of Q4 2023. Additionally, Berkshire Hathaway's liquid assets exceeding short-term obligations and its ability to cover interest payments with cash flows solidify its financial stability.

InvestingPro offers more insights and tips for investors looking to delve deeper into Berkshire Hathaway's financials and market performance. For instance, there are additional InvestingPro Tips indicating that the company is expected to remain profitable this year and has been profitable over the last twelve months. For those interested in a comprehensive analysis, InvestingPro provides a total of 8 tips for Berkshire Hathaway, which can be accessed through their platform. To enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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