UBS raised its price target for Berkshire Hathaway (NYSE:) (BRK.A) (BRK.B) stock to $481 from $477 in a note released on Friday. This upward revision, coupled with the stock's maintained Buy rating, underscores the positive outlook and potential for investors.
The investment bank expressed a positive outlook for Geico and BNSF in its Berkshire Hathaway earnings preview, giving it confidence in the creation of BRK.
The bank also raised its first-quarter BRK EPS forecast to $4.90 from $4.65 for the company's 'B' shares ($6,979 to $7,356 for 'A' shares). This is “primarily due to an improvement in underlying loss ratios at GEICO (in line with PGR's expectations)” (reported monthly) and higher volume at BNSF. ”
“As a result of the adjustment, our 2024 EPS forecast moves from $19.15 to $19.77 for ‘B’ shares (from $28,725 to $29,655 for ‘A’ shares). We forecast first quarter BVPS of $396,447 for A shares and $264.08 for B shares (~1.8% growth going forward),” UBS explained.
In line with its peers, UBS expects GEICO's underwriting margins to improve significantly year over year. Additionally, both Berkshire Hathaway Reinsurance Group (NYSE:) (BHRG) and Berkshire Primary (BP (NYSE:)) “are benefiting from favorable real estate/casualty reinsurance/insurance market conditions; We expect significant premium growth and improved underwriting profitability.”
“BNSF should see sales increase, while operating margins should increase year-over-year.” [year-on-year]UBS added: “We expect BRK Energy's revenues to decline by 2% due to a slowdown in real estate brokerage revenues (included in BRK Energy), given the continued decline in existing home sales.”
