Following its relatively weak Q3 showing, CFRA lowered Berkshire Hathaway's (BRK.B, Financial) B shares from "Buy" to "Hold." Warren Buffett (Trades, Portfolio)'s investment behemoth, reported a 13% drop in energy income and a modest increase in insurance premiums at 3% YOY, below peer averages. Reported Saturday, Wall Street expressed dismay at the results; Berkshire B shares dropped 2.2% and A shares (BRK.A, Financial) slumped 2.1% in Monday trading.
Along with reinsurance, GEICO's performance showed strength according to CFRA analyst Catherine Seifert, although she voiced concerns about slow development in Berkshire's Primary Group and commercial lines. As elements influencing the stock's momentum, Seifert also highlighted Berkshire's growing cash reserves—now totaling $325 billion—and the lack of share buybacks in Q3.
"While we appreciate GEICO's results, adverse claim development and limited commercial growth temper our Outlook," Seifert said. She also lowered the FY2024 EPS projection for Berkshire by $0.42 to $20.04 and the FY2025 by $0.88 to $21.62. Reflecting lower expectations for near-term catalysts, CFRA dropped its 12-month price objective for Berkshire B shares from $525 to $495.
