Analyst Caution in Buffett and Berkshire Hathaway (BRK-B, BRK-A)

Berkshire Hathaway Inc. (NYSE: BRK-B) (NYSE: BRK-A) does not usually gets new Wall Street analyst coverage.  It seems that keeping up with the inner workings of Warren Buffett and all the Berkshire Hathaway portfolio ends up being much like picking an S&P tracking fund.  Still, a slightly cautious research coverage call came out this morning from Barclays.  The firm picked up coverage with an Equal-Weight rating and the price target is split between the B-shares and A-shares.  Those new targets are $88.00 and $132,000 respectively, meaning that the implied upside is still about 9%.

Some caution was noted in the Buffett succession plan, which has still been withheld from the public outside of the notion that there are three candidates inside the company.  There is also caution noted about a weaker insurance environment and a slowing of growth and return on equity in 2010 and 2011.

The analyst, Jay Gelb, believes that Buffett does probably have enough time with his three internal candidates, but noted that the Buffett-premium may leave the shares once Mr. Buffett is out of the picture and no longer running the show.

What is interesting here in today’s analyst coverage is that the only real new information is not new.  The succession plan has been under discussion for years now and the company already disclosed that its growth was lower.

Buffett was much more confident in his annual letter sent out on February 27.  But Buffett did note, “The big minus is that our performance advantage has shrunk dramatically as our size has grown, an unpleasant trend that is certain to continue.”  The rest of the Buffett opinions and outlook from his annual letter can be found there.

We also asked another Buffett watcher and financial planner, Bryon Townsend of W.R. Anderson & Co., about his opinion of Berkshire Hathaway.  Townsend noted something unique which has not been discussed much elsewhere, “Berkshire Hathaway would not even fit the current screening criteria of a company Buffett would invest in himself.”

The trading of the last 52-weeks includes higher lows than have been seen at the peak of the selling panic, but the highs also are lower than the all-time highs.  At $121,015, the 52-week trading range is $83,957.00 to $140,711.00.  Berkshire is under-followed by Wall Street analysts, but this price target is actually above the median price target of $125,333 listed as the consensus data from Thomson Reuters.

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JON C. OGG