On Wednesday, Berkshire Hathaway Inc . (NYSE:BRKa) (NYSE:BRK-B) received an upgrade from a Hold to a Buy rating by a research firm, with a new price target set at $450.00. The firm's decision follows Berkshire's first-quarter financial report on May 4, which showed a revenue increase of 5% to $89.9 billion compared to the same period last year. Net operating earnings saw a significant 39% rise to $11.2 billion.
The earnings per diluted Class B share also increased from $3.69 to $4.80 year-over-year. This performance has been reflected in the company's stock value, which has climbed 28% over the past year, outpacing the broad market's 26% gain. Over a five-year span, Berkshire Hathaway shares have surged 102%, exceeding the S&P 500's 88% return.
The upgrade comes in the wake of Berkshire Hathaway's strategic acquisition of approximately 26 million shares of Chubb (NYSE:CB) Limited, valued at $6.72 billion. This purchase has afforded Berkshire a 6.4% ownership stake in the property and casualty insurer, augmenting its existing insurance portfolio that includes notable names such as GEICO, General Re, and Alleghany (NYSE:Y) Corp.
The firm's analysis suggests that Berkshire Hathaway's stock is currently undervalued, trading at 21 times the projected operating earnings per share (EPS) for 2024, which is below the S&P 500's average multiple of 24. The new price target of $450 is based on a 23-times multiple of the firm's operating EPS forecast for the company.
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