Investment banking firm Keefe Bruyette has maintained its bullish stance on Berkshire Hathaway (BRK.B) despite the company falling short of third-quarter earnings expectations. The firm has raised its price target for the Warren Buffett-led conglomerate to a staggering $750,000, even while maintaining a Market Perform rating on the stock.
Berkshire Hathaway’s third-quarter operating earnings per share came in at $7,023, missing analysts’ forecasts of $7,335. The shortfall was primarily attributed to weaker-than-expected results in property and casualty underwriting, as well as in the Manufacturing, Service, and Retailing sectors. Additionally, the company faced higher “other” losses than anticipated.
However, the company experienced strong performance in its Railroads, Utilities, and Energy sectors, along with robust insurance investment income. This offset some of the negative impacts on earnings. Keefe Bruyette acknowledged that the earnings miss and the absence of share repurchases could exert downward pressure on Berkshire’s stock price in the short term.
Despite the miss, Keefe Bruyette remains optimistic about Berkshire Hathaway’s long-term prospects. The firm highlighted that the decline in third-quarter operating earnings was largely driven by weaknesses in the company’s insurance underwriting segment, a factor that is likely to fluctuate over time.
As of the end of September, approximately 70% of Berkshire’s aggregate fair value was concentrated in five companies, underscoring its investment strategy focused on long-term value creation. This strategy has been a key driver of Berkshire’s success over the years and is likely to continue to generate strong returns for investors in the future.
The firm’s decision to raise its price target despite the earnings miss reflects its confidence in Berkshire’s ability to overcome short-term challenges and continue its long-term growth trajectory. While the stock may experience some volatility in the near future, investors with a long-term perspective are likely to find the current price dip an attractive entry point.
