Expectations from analysts
Wall Street analysts and institutional investors have preferred conglomerates over the past few decades. This preference is due to their inherent features of diversification and brand equity, which pave the way for consistent growth in operating performance. As a result, these companies have commanded a premium compared to bigger names in specific sectors.
Wall Street has a positive view of Berkshire Hathaway’s (BRK.B) performance, which is reflected in its ratings. Analysts assigned four “strong buy” or “buy” ratings out of six for Berkshire Hathaway in February 2018. The remaining two analysts recommended “hold” ratings. Analysts gave Berkshire Hathaway an NTM (next-12-months) price target of $330,700, implying 9.7% growth from its current price.
Interest rate expectations, higher valuations, and high fiscal deficits have been concerns cited by analysts when it comes to the performance of asset managers (XLF).
Opinions on peers
Among Berkshire Hathaway’s (BRK.B) major peers, analysts assigned insurance giant AIG (AIG) a target price of $68.36, implying 14.0% growth. Of the 19 analysts, ten recommended “buy” or “strong buy” ratings, seven assigned a “hold,” and two have assigned “underperform” or “sell” ratings to AIG.
Of the 17 Wall Street analysts covering conglomerate General Electric (GE), seven recommended “buy” or “strong buy” ratings, six gave “hold” ratings, and the remaining four assigned “underperform” or “sell” ratings to GE. The price target has been revised down to $18.57, with an implied upside of 27.0%.
Among the major insurers, Chubb (CB) is commanding a favorable rating with 16 of 19 analysts calling for “buy” or “strong buy” ratings. The remaining three analysts recommended one rating each for “hold,” “underperform,” and “sell.” Chubb stock has a price target of $165.81, implying an upside of 15.9%.