Is it smart to bet against Warren Buffett? Historically the answer has been no. With Buffett stepping down from his day-to-day leadership role later this year, that may no longer be the case. Monday’s analyst upgrades and downgrades included a rare and perhaps unusual downgrade for Berkshire Hathaway Inc. (NYSE: BRK-B) — and to the equivalent of a “Sell” rating!
While Monday’s downgrade is no longer breaking news, Oggonomics wants to see what’s really under the hood here to determine whether short-term woes may be compounding into long-term woes that might send Buffett acolytes elsewhere.
After having been indicated down about 1.7% in mid-day trading, Berkshire Hathaway’s B shares closed down just 0.8% at $488.07. The problem is that this closing price was almost exactly 10% under its all-time high of $542.07 when the stock market is at all-time highs.
Keefe Bruyette & Woods analyst Meyer Shields cut his rating to Underperform from Market Perform. His price target was issued on the A-shares to $700,000 from $740,000. This call represents another 5% of downside ahead, if it proves to be correct. This would give the B-share’s current $488.07 share price a target of about $466. And its 52-week range is 437.90 to $542.07.
Oggonomics always reminds its readers that no single analyst report should ever be the sole reason to buy or sell a stock. Still, all that talk of a great giant stock market bubble just refuses to die with stocks at all-time highs.
That said, let’s look at some of the issues here to see if long-term investors should consider this as a time to finally move on.
It is no secret that Berkshire Hathaway stock has lagged behind the market handily in 2025. Buffett’s retirement news has removed a significant premium that had always been in the stock. And the valuation would still be about 22-times earnings, which isn’t cheap for a conglomerate that is treated as a financial stock in most indexes.
Berkshire Hathaway rarely receives big upgrades and downgrades. In fact, it is a very thinly covered stock due to its complexities of a massive investment portfolio and breaking out the financial operations from its conglomerated operations in rail, energy and industrial plays. Only 7 analysts from well-known forms cover Berkshire Hathaway, and of those there are now four “Hold” ratings, 2 “Buy” ratings and 1 “Sell” rating.
Shields said that “many things are moving in the wrong direction” and that the stock value also comes with a historically unique succession risk. Here are some of the major points worth considering now that the analyst downgrade is a day old…
- Berkshire is underperforming the S&P 500 by roughly 10 percentage points in 2025
- GEICO’s current underwriting profit margins above 15% are (unsustainably) high
- those margins are expected to revert to more normal levels closer to 5%
- a light hurricane activity is creating a near-term benefit for earnings, but is also causing declining reinsurance rates
- lower reinsurance rates will likely pressure future profitability in the property/casualty insurance business
- lower short-term interest rates will reduce investment income on the $300+ billion cash position, most of which is invested in U.S. Treasury bills
- tariff pressures should negatively impact the rail operations
- the phase-out of clean energy tax credits threatens Berkshire Hathaway Energy’s profitability from future renewable energy projects
- lower earnings per share expectations for 2026 and 2027
- a sum-of-the-parts valuation suggests shares have more downside to the price target
That’s all for now.
