UBS has raised its price target for Berkshire Hathaway (NYSE:BRKa) (BRK.A) (BRK.B) shares, now at $481 from the previous $477, in a note released on Friday. This upward revision, coupled with the maintained Buy rating on the stock, underscores the positive outlook and potential for investors.
The investment bank, in its Berkshire Hathaway earnings preview, expressed a positive outlook for Geico and BNSF, which has given it confidence in BRK's setup.
The bank also raised its first-quarter BRK EPS estimate to $4.90 from $4.65 for the company's "B" shares ($7,356 from $6,979 for "A" shares), which is "largely driven by better GEICO underlying loss ratios (consistent with what PGR has been reporting monthly) and better volumes at BNSF."
"As a result of our adjustments, our 2024 EPS projection moves to $19.77 from $19.15 for "B" shares (from $28,725 to $29,655 for "A" shares ). We are projecting1Q24 BVPS of $396,447 for A shares and $264.08 for B shares (~1.8% sequential growth)," explained UBS.
Similar to peers, UBS expects GEICO's underwriting margins to see substantial year-on-year improvement. Furthermore, they expect strong premium growth and improved underwriting profitability at both Berkshire Hathaway Reinsurance Group (NYSE:RGA) (BHRG) and Berkshire Primary (BP (NYSE:BP)) "as they benefit from the favorable property/casualty re/insurance market conditions."
"BNSF should see rising volumes while, with operating margins increasing y/y [year-on-year]," added UBS. "We are forecasting a 2% decline in revenues at BRK Energy due to the slowdown in real estate brokerage revenues (which is included in BRK Energy) given the continued decline in existing homes sales."