Key Takeaways:
Berkshire Hathaway initiated a share repurchase of over $200 million on March 4, the first day of its resumed buyback program, as the stock’s performance lags the S&P 500 by nearly 40 percentage points over the past year.
"The business fundamentals are fine but not phenomenal," UBS analyst Brian Meredith said, who maintains a Buy rating on the stock. Meredith sees room for new CEO Greg Abel to improve performance at key divisions like BNSF and Berkshire Hathaway Energy.
The conglomerate's Class A shares have fallen 13% since Buffett announced his departure, trading at less than 1.4 times its estimated first-quarter book value, down from 1.8 times a year ago. The company holds $373 billion in cash and equivalents, with analysts estimating its annual earnings power at approximately $50 billion.
The stock's decline reflects investor uncertainty surrounding the new leadership of Greg Abel and how he will deploy the massive cash hoard. The resumption of buybacks may signal a more aggressive approach to capital return, with the company's next 10-Q report on May 2 expected to provide further details on the scale of the program.
Greg Abel, who succeeded Warren Buffett as CEO at the end of 2025, now has oversight of most of Berkshire's $300 billion equity portfolio. The move comes as a mild surprise to some investors who expected other managers to have more authority. Abel's immediate challenge is to address lackluster revenue trends and articulate a clear strategy for deploying the company's vast cash reserves. "I’d like to see Greg Abel confront the issues and outline a plan for profit and revenue improvement," Cathy Seifert, an analyst at CFRA, said.
Despite the recent underperformance, some analysts see value in Berkshire's shares. Chris Bloomstran of Semper Augustus Investments estimated the company's intrinsic value at $855,000 per share, 21% above its current price. UBS analyst Brian Meredith holds a price target of $871,000 on the Class A shares, implying nearly 25% upside. The stock's future performance will likely depend on Abel's ability to navigate the post-Buffett era, improve operational efficiencies, and make value-accretive investments with the firm's significant cash position.
This article is for informational purposes only and does not constitute investment advice.
