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Macroeconomics, Insurance to Dictate Berkshire Hathaway's 2H17

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Part 7
Macroeconomics, Insurance to Dictate Berkshire Hathaway's 2H17 PART 7 OF 11

Why Analysts Are Giving Positive Ratings to Berkshire Hathaway

‘Buy’ ratings rise

Berkshire Hathaway (BRK.B) stock is priced very high at ~$273,660 with no dividends. As a result, the stock has seen less volatility and major investments from financial institutions and asset managers. Of the seven analysts covering the stock, four have given it a “buy” or “strong buy” recommendation in September 2017 compared to three in the previous six months. The remaining three analysts have issued “hold” ratings. Wall Street has given a 12-month target of $290,900 for the stock, implying an average growth rate of 6.3%.

Why Analysts Are Giving Positive Ratings to Berkshire Hathaway

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The stock’s performance can be compared to the S&P 500 (SPY) (SPX-INDEX) due to its diversified holdings. Management’s deployment theme has remained the same as Warren Buffett continues to invest in growth companies. However, new managers could earmark some portion for aggressive deployments.

Rating other conglomerates

Among Berkshire’s major peers, American International Group (AIG) has 11 of 19 analysts issuing it “buy” or “strong buy” ratings in September 2017. Six analysts have rated it a “hold,” and two have rated it “underperform” or “sell.”

Eight of the 16 analysts covering General Electric (GE) stock in September 2017 have given it a “buy” or “strong buy” rating, while six analysts have rated it a “hold,” and two have rated it an “underperform.”

For Chubb (CB), 15 of the 19 analysts covering the stock have rated it a “buy” or “strong buy” in September 2017, while two analysts have given it a “hold” rating. Two analysts have given it an “underperform” or “sell” rating.

Together, these companies make up 7.8% of the Financial Select Sector SPDR ETF (XLF).

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