UPDATE: Nomura Initiates Berkshire Hathaway with Buy on Expected High Operating EPS
In a report published Wednesday, Nomura analyst Clifford Gallant initiated coverage on Berkshire Hathaway (NYSE: BRK-A) with a Buy rating and price target of $184,000.00.
In the report, Gallant noted, “Berkshire Hathaway (BRK/A) should reach record-high operating EPS over the next two years, reaching nearly $16bn by 2014 (12.7% CAGR), with continued growth thereafter. In particular, GEICO, BNSF and the collection of Manufacturing, Service and Retail businesses (roughly 70% of 2013E earnings) should see record-high earnings. Our Berkshire model assumes modest U.S. GDP growth near 3%, but with over 85% of the company's revenues in the U.S., anything better for the U.S. would mean even greater Berkshire earnings. BRK/A is trading at 1.3-1.4x book value, below its historical mean of near 1.5x and below our sum-of-the-parts valuation of $184,000. Operating company earnings drove approximately two-thirds of BRK's intrinsic value creation in 2012, but we expect that to grow to be over 80% through 2014.”
Berkshire Hathaway closed on Tuesday at $159,000.00.
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