Berkshire Hathaway’s Stock Hits Record High as Quarterly Profit Soars to $10 Billion
Berkshire Hathaway, the conglomerate led by billionaire investor Warren Buffett, experienced a surge in its stock price on Monday, setting a new record high. The stock rose by more than 2% after the company announced that its quarterly operating profit exceeded $10 billion for the first time in its history.
During morning trading, Berkshire’s stock price climbed by $14,300, or 2.7%, reaching $547,900. This surpassed the previous high of $544,000, which was achieved on March 28, 2022.
The rise in interest rates proved beneficial for Berkshire in the second quarter, allowing the Omaha-based company to generate higher profits from fixed-income investments. This included a cash stake that grew to $147.4 billion. Additionally, a decrease in accident claims bolstered the performance of Geico car insurance.
These positive developments helped offset declining profits from other sectors, such as the BNSF railroad, as well as lower earnings from building product companies like Clayton Homes, consumer businesses including Forest River recreational vehicles, and Duracell batteries.
Berkshire also reported a second-quarter net income of $35.9 billion, which included unrealized gains on investments, notably in Apple. The tech giant’s stock price rose by 17.6% during the quarter, contributing to Berkshire’s impressive financial performance. At the end of June, Berkshire owned $177.6 billion worth of Apple shares.
Analysts have responded positively to Berkshire’s performance, with UBS analyst Brian Meredith raising his 12-month price target for the Class A shares to $621,591, up from $608,000. Meredith considers the stock to be an attractive investment in an uncertain macro environment. Similarly, Keefe, Bruyette & Woods analyst Meyer Shields, who rates Berkshire as market perform, increased his price target from $545,000 to $565,000.
While Berkshire’s Class B shares usually trade at around 1/1,500th of the Class A share price, they no longer consistently outperform the Standard & Poor’s 500 as they did in the past. However, over extended periods, they can track or slightly outperform the index with less volatility. In 2023, Berkshire shares have slightly trailed the index, despite outperforming it in 2022.
Warren Buffett, who has been at the helm of Berkshire since 1965, manages a conglomerate worth approximately $800 billion. Berkshire’s holdings include various businesses across sectors such as energy, car dealerships, real estate brokerage, manufacturing, industrial enterprises, and consumer brands like Dairy Queen, Fruit of the Loom, and See’s Candies.
The strong financial performance and record-breaking profits suggest that Berkshire Hathaway continues to thrive under Warren Buffett’s leadership. Despite some sector-specific challenges, the company’s diversified holdings contribute to its overall success. With its recent stock price surge and positive analyst predictions, Berkshire appears poised for continued growth and success in the future.
(Based on the news by Jonathan Stempel, Chuck Mikolajczak, Lance Tupper, and David Gregorio)
