KBW analyst Meyer Shields, who had rated Berkshire a “market perform,” also cut his price target for the Omaha, Nebraska-based conglomerate’s Class A shares from $740,000 to $700,000 in his report Sunday.
Underperform and sell ratings are rare on Wall Street. Shares of Berkshire closed Friday at $738,500 and were down nearly 1% in early Monday trading.
Buffett plans to hand over the CEO title he has held since 1965 to Vice Chairman Greg Abel in January, although the legendary investor will remain chairman.
Berkshire Class A shares have lagged the Standard & Poor’s 500 by more than 28 percentage points since Buffett announced the management change on May 3.
Shields said Berkshire’s auto insurance company Geico should see the percentage of premiums used to pay accident claims rise after two years of declines as it cuts rates and boosts marketing to regain market share lost to rivals like Progressive. He said the BNSF railroad’s focus on the western U.S. makes its growth vulnerable to higher tariffs and declining trade with Asian countries, especially China. Shields also said falling interest rates will reduce the income from Berkshire’s money. holdings, which totaled $344.1 billion as of June 30, while the accelerated elimination of renewable energy tax credits under President Donald Trump’s One Big Beautiful Bill Act could limit profits at Berkshire Hathaway Energy.
Buffett’s departure is also a drag because it reflects his “likely unrivaled reputation and what we view as woefully inadequate disclosure that will likely deter investors once they can no longer rely on Mr. Buffett’s presence,” Shields wrote.
Berkshire is expected to report third-quarter results on November 1.
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