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Valued at a market cap of $1 trillion, Berkshire Hathaway Inc. (BRK.B) owns a diverse range of businesses across sectors, including insurance, energy, railroads, manufacturing, consumer goods, and retail. The Omaha, Nebraska-based company also maintains a substantial equity investment portfolio.
This multinational conglomerate has lagged behind the broader market over the past 52 weeks. Shares of BRK.B have gained 11.1% over this time frame, while the broader S&P 500 Index ($SPX) has surged 21.1%. Moreover, on a YTD basis, the stock is up 3.5%, compared to SPX’s 7.9% uptick.
Narrowing the focus, BRK.B has also underperformed the iShares U.S. Financial Services ETF’s (IYG) 32% rise over the past 52 weeks and 10.6% return on a YTD basis.
Berkshire Hathaway delivered its Q2 results on Aug. 2, and its shares plunged 2.9% in the following trading session. Due to lower insurance sales and service revenues, the company’s top-line fell 1.2% year-over-year to $92.5 billion. Furthermore, its operating earnings declined 3.8% from the year-ago quarter to $11.2 billion, fueled by a 12% drop in insurance underwriting income.
For the current fiscal year, ending in December, analysts expect BRK.B’s EPS to decline 6.7% year over year to $20.53. The company’s earnings surprise history is disappointing. It missed the consensus estimates in three of the last four quarters, while exceeding on another occasion.
Among the six analysts covering the stock, the consensus rating is a "Moderate Buy” which is based on two “Strong Buy,” and four “Hold” ratings.
The configuration has remained consistent over the past three months.
On Aug. 4, UBS Group AG (UBS) analyst Brian Meredith maintained a "Buy" rating on BRK.B and raised its price target to $597, the Street-high price target, implying an ambitious 27.3% potential upside from the current levels.
The mean price target of $539.25 represents a 15% premium from BRK.B’s current price levels.
