Berkshire Hathaway stock forecast: Can it weather inflation? (2024)

Berkshire Hathaway (BRK.A) (BRK.B), the diversified holding company led by US billionaire and renowned investor Warren Buffet, has showed that it can weather many storms, including the economic downturn caused by the Covid-19 pandemic, uncertainties following Russia’s invasion of Ukraine and US rate hikes to combat inflation.

At the end of March 2022, the company’s stock hit an all-time high closing price. Berkshire has been ramping up acquisitions, notably in oil explorers, whose stocks have surged in line with rallying energy prices.

Will Berkshire’s fresh acquisitions keep its stock in the uptrend amid rising inflationary pressure and rate hikes environment? The article will look into fundamentals, news and the latest Berkshire Hathaway share price forecast from analysts.

Berkshire Hathaway stock analysis: Technical views and price drivers

Berkshire Hathaway divides its stock into two categories: Class A (BRK.A) and Class B (BRK.B). Class A shares were the company’s first public offering. They are known for their hire price per share. Small investors can invest in the more affordable Class B shares, which were originally issued in 1996.

Berkshire Hathaway stock value fared relatively well during the pandemic. The company’s shares gained 28.95% in 2021 after a 2.37% increase in 2020.

The stock closed at $300.79 a share on 3 January. Berkshire Hathaway's historical stock price continued to advance. Shares closed at an all-time high of $359.57 on 28 March 2022. The rise followed the company’s announcement that it had acquired insurer firm Alleghany Corp the previous week. The next day, BRK.B hit a new high of $362.10 a share.

Berkshire’s stock has gained 6.65% this year and 9.61% year-to-date (YTD). It’s also beaten the S&P 500 Index, which has dropped 13.49% this year.

At the time of writing (9 May), a technical analysis by TradingView showed that BRK.B’s daily indicators suggested a ‘sell’. They were neutral on the weekly indicators and pointing to ‘buy’ for monthly indicators. Most moving averages (MAs) in the daily analysis pointed to ‘sell’. The relative strength index (RSI) reading was at a neutral 34.81.

Q1 earnings hit by slowing economy

Berkshire Hathaway reported net earnings of $5.46bn in the first quarter of 2022, a 53.3% fall from $11.71bn in the same quarter in 2021. The company attributed the drop to ongoing economic impact from the Covid-19 pandemic and geopolitical conflicts, which continue to disrupt supply chains and raise the costs of goods and services.

The company’s earnings declined as US gross domestic product (GDP) fell at a rate of 1.4% in the first quarter of this year as the Covid-19 Omicron variant “resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country”, said the US Department of Commerce in a statement on 28 April.

Berkshire’s operating earnings were little changed at $7.04bn, compared to $7.018bn in Q1 2021, due to a drop in its insurance underwriting businesses, which dropped almost 94% to $47m from $764m.

Earnings from manufacturing, service and retailing businesses rose by 15.5% to $3.025bn from $2.619bn. The company also recorded $1.58bn of investment and derivatives losses in the first quarter of 2022 compared to $4.69bn gains in the year-earlier period.

Berkshire Hathaway does not pay stock dividends. In a letter to investors in 2012, Buffet explained that the company did not pay dividends because it used its profit for reinvestment, acquisitions and share repurchases.

Berkshire Hathaway stock news: Fresh purchases

In the past few months, Berkshire Hathaway has been ramping up purchases to benefit from its massive cash reserves. Some of the purchases reflected a shift in the company’s portfolio to adjust with the current market situation.

Tapping high crude prices, Berkshire has been increasing its stakes in US oil companies Chevron (CVX) and Occidental Petroleum (OXY). As of 3 May, Berkshire Hathaway held 142.26 million shares in Occidental Petroleum, up from 91.16 million shares on 4 March, according to filings. OXY stock value has gained 124% this year and 137% in the past year as oil prices have surged. International benchmark Brent oil futures have gained more than 44% this year.

Berkshire’s investment in Chevron jumped to $25.9bn by 31 March 2022, from $4.48bn at the end of 2021. Chevron’s shares have risen more than 45% this year and 55% year-on-year (YOY).

Berkshire Hathaway acquired insurer Alleghany Corp for $11.6bn in March. It bought 120.95 million shares in information technology company HP (HPQ) . Berkshire purchased HP’s shares in multiple transactions from 4 April to 6 April at prices ranging from $35.7400 to $36.6775.

Greggory Warren, analyst at Morningstar said on 6 May note:

“Management has finally found places to put large amounts of capital to work, the large-scale investments in Occidental Petroleum and Chevron have increased Berkshire’s exposure to the oil/energy sector (but not really lessened the firm’s exposure to Apple and the technology), the Alleghany deal would likely have never had occurred had Buffett not received an email from Joe Brandon (who had run General Re for Berkshire during 2001-08 and only recently became Alleghany’s CEO), Geico and BNSF continue to drag their feet on addressing their biggest competitive risks, and investors shouldn't expect Berkshire to split the chairman and CEO roles (as long as Buffett is running the show).

“We expect 2022 and 2023 to be a return to more normalised levels of revenue growth and profitability, with the Alleghany acquisition being additive to results in 2023.”.

Berkshire Hathaway stock projections: Targets for 2022, 2025 and 2030

As of 9 May, according to stock analysis company MarketBeat, the consensus rating of one analyst for Berkshire Hathaway B stock was a ‘buy’. It offered an average 12-month price target for Berkshire Hathaway of $329.

Four Wall Street analysts tracked by TipRanks had an overall ‘hold’ rating for Berkshire Hathaway B stock in the past three months. The analysts set BRK.B stock price target at $359.67 for a 12-month period, representing a 12.79% change from the closing price of $318.88 on 7 May. The four analysts offered a high forecast of $373 and a low price target of $351.

Seven investment analysts polled by CNN Money rated Berkshire Hathaway’s stock a ‘hold’. Three out of seven analysts offered a 12-month price of $373, or a 16.94% increase from the closing price of $318.96 on 6 May.

In its Berkshire Hathaway stock prediction, Economic data provider Trading Economics said that it expected the stock to trade at $308.33 by the end of this quarter and at $286.66 in a year. The company did not provide a Berkshire Hathaway B stock forecast for 2025 and 2030.

Wallet Investor estimated Berkshire Hathaway stock value could rise to $397.132 by May 2023 and $546.785 by May 2025. The algorithm-based forecasting service expected the company’s share to trade at $692.131 in April 2027. It had no projections for 2030.

When looking for Berkshire Hathaway stock market predictions, keep in mind that analysts’ forecasts and price targets can be wrong. They should not be interpreted as a recommendation to invest in the company.

It’s critical to conduct your own research and keep up with the latest market trends and stock news. Remember that your decision to trade is influenced by your risk tolerance, market knowledge, the spread of your investment portfolio, and how comfortable you are with losing money. You should never invest more money than you can afford to lose.

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