Berkshire Hathaway (BRK.B) stock continued its recent remarkable run Monday, helped by better-than-expected quarterly results, Wall Street lifting its price target on shares, and another successful performance by Chairman and CEO Warren Buffett (and partner Charlie Munger) at the holding company's annual meeting over the weekend.
Berkshire Hathaway stock gapped up as much as 2% soon after the opening bell, adding to a run of outperformance that began shortly after the crisis in regional bank stocks shook the broader market.
With a market capitalization of more than $715 billion, even just a single percentage point move in the BRK.B share price equates to more than $7 billion in shareholder value. More impressively, Berkshire Hathaway stock has added nearly 12% since hitting a year-to-date low on March 17 – a period in which the S&P 500 gained 5.5%.
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Berkshire Hathaway, of course, has been a market beater for decades. Indeed, it's one of the best stocks of the past 30 years. Perhaps less appreciated is how well Warren Buffett's conglomerate has done by shareholders since the early days of the pandemic. As you can see in the chart below, over the past three years, Berkshire Hathaway stock is up 89%, good for an annualized return of 22.5%.
By comparison, the S&P 500 generated a total return (price change plus dividends) of 50%, or 14.8% annualized. (Warren Buffett loves dividend stocks, but Berkshire Hathaway famously doesn't pay one itself.)
And after the latest Berkshire Hathaway annual meeting, BRK.B investors have to feel pretty good about Buffett & Co. maintaining the stock's market beating ways going forward.
Berkshire Hathaway stock outlook
"We viewed Berkshire's 2023 annual meeting as the best in several years with quality questions and insightful answers," writes UBS Global Research analyst Brian Meredith, who rates the stock at Buy.
The analyst praised Buffett's commitment to making investments in upgrading technology, data and analytics at Berkshire Hathaways' Geico insurance business, and liked what he heard about improving margins at subsidiary BNSF railway.
More importantly, Warren Buffett made clear that Berkshire Hathaway will not acquire Occidental Petroleum (OXY). Buffett guzzled up shares in the oil and gas company in 2022, and received regulatory approval to purchase up to 50% of OXY's shares outstanding. That fueled speculation that Berkshire would look to acquire the entire operation – which always seemed somewhat farfetched.
With an enterprise value (or theoretical takeout price) of more than $82 billion – plus a deal premium – OXY would have more than doubled the size of Berkshire Hathaway's largest ever acquisition. To date, the $44 billion in cash and debt-assumption Buffett paid for railroad operator BNSF in 2009 stands as the company record.
As for BRK.B stock, UBS lifted its target price to $377 from $371. That's modest, to be sure, but since only four analysts cover the stock, per S&P Global Market Intelligence, it did move the consensus needle. With an average price target of $361.33, analysts give Berkshire Hathaway stock implied upside of more than 10% in the next year or so.
One analyst rates shares at Strong Buy, one says Buy and two have them at Hold. That works out to a consensus recommendation of Buy, with mixed conviction.
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