Berkshire Hathaway Faces Mixed Outlook from New Analyst

Warren Buffett's Berkshire Hathaway has recently come under the scrutiny of TD Cowen's Andrew Kligerman, who initiated coverage with a hold rating and a 12-month price target of $697,000. This projection suggests a potential 7% increase in the stock's value. Kligerman expressed concerns about the conglomerate's performance in its non-insurance sectors, including railroads, utilities, and retail, while acknowledging the continued strength of its insurance operations. Kligerman highlighted specific challenges facing Berkshire's subsidiaries, particularly the BNSF railroad, which is dealing with wage increases and declining revenues. Additionally, the utility division, BHE, is experiencing setbacks due to wildfire-related damages. The analyst noted that the conglomerate's manufacturing and retail businesses are closely linked to the broader U.S. economy, which is currently grappling with inflationary pressures. Despite these challenges, Berkshire's insurance segment has shown remarkable resilience, reporting a 185% year-on-year increase in underwriting earnings for the first quarter, largely attributed to the performance of Geico. The company is expected to release its second-quarter earnings next month, which could provide further insights into its financial health. Berkshire Hathaway's stock has performed well this year, with shares rising over 20%, outpacing the broader market. Currently, only seven analysts cover the conglomerate, with four holding buy-equivalent ratings and three maintaining hold ratings, indicating a divided sentiment among market experts.