Q: Is Berkshire Hathaway a buy?
A: Warren Buffett looked like much of an Oracle of Omaha lately. But analysts think his Berkshire Hathaway (BRKA) is an opportunity.
Shares of Buffett’s Berkshire have been struggling. Shares of class A shares are down 11% over the past 12 months closing at $198,191 each - trailing the roughly 7% decline by the Standard & Poor’s 500. Investors have hurt the stock on fears some of Berkshire’s most economically sensitive businesses could slow in a weak economy.
Investors are hoping for better profit margins from the company’s insurance businesses, for instance. Additionally, Berkshire has taken some lumps on its public holdings. American Express (AXP) is one of Berkshire’s biggest investments. But shares of the company have fallen by a third over the past year.
Investors also seem to be pricing in a flat year for revenue in 2016. Analysts expect Berkshire’s revenue this year to drop 0.4% to $209.6 billion. Analysts, though, think Berkshire is an opportunity. Berkshire’s insurance business stands to gain market share in 2016, says Catherine Seifert of S&P Global. All told, analysts see the company’s adjusted earnings to jump 17% this year. Analysts think Berkshire’s shares will be 21% higher in 18 months.
