Berkshire Hathaway Inc (NYSE:BRK.A) shares are trading at an 8% discount to intrinsic value, UBS said, raising its price target on the conglomerate ahead of its second-quarter earnings release.
UBS lifted its target to $877,848 for Class A shares from $854,596, and to $585 for Class B shares. The bank also raised its 2Q26 earnings estimates to $7,973 per A-share and $5.32 per B-share, both up 3%, citing heavier buybacks, stronger results at BNSF railroad and lower catastrophe losses in insurance.
UBS estimates Berkshire repurchased about $8.5 billion of stock between April 15 and July 14, based on a 13D/A filing tied to Warren Buffett's charitable stock donation. The bank called the buyback pace bullish, noting shares traded at 1.45 times book value over the period.
The quarter included the closing of Berkshire's Taylor Morrison acquisition and a $10 billion investment in Alphabet to fund AI development.
For 2026 and 2027, UBS raised operating earnings estimates by 1.3% and 0.8%, respectively, to $21.05 and $21.32 per B-share, largely on higher assumed buybacks of $8.6 billion, up from $1.5 billion previously.
UBS expects GEICO's underwriting margins to keep narrowing as the unit leans into growth through flat to declining rates and higher ad spend, forecasting an 88.3% combined ratio versus 83.5% a year earlier. Reinsurance premiums are expected to rise 5%, helped by a new quota-share deal with Tokio Marine, while competitive pricing pressures growth elsewhere.
Among non-insurance units, BNSF faces a modest fuel-cost headwind before turning to a tailwind next quarter. Berkshire Hathaway Energy is expected to post revenue up 5% and pre-tax operating earnings up 31%, while the manufacturing, service and retailing segment is seen growing earnings 3.9%.