Berkshire Stock Gets Upgraded. Here’s Why the Analyst Says Buy.

Berkshire Hathaway was upgraded due to its recent underperformance. (JOHANNES EISELE/AFP via Getty Images)

Edward Jones upgraded Berkshire Hathaway stock to a Buy from a Hold, citing the stock’s underperformance in recent months and its strong balance sheet with almost $350 billion in cash.

The rating action came Friday as coverage shifted back to analyst James Shanahan. He had covered Berkshire for Edward Jones prior to April 30, when analyst Kyle Sanders assumed coverage of the conglomerate.

In upgrading the stock Friday, Shanahan noted the weak showing of Berkshire. When the stock peaked on May 2, it was more than 20 percentage points ahead of the S&P 500 for the year. Berkshire’s Class A stock, which ended Friday at $740,400, is now up 9% so far in 2025, about five percentage points behind the key index.

Berkshire valuation has gotten more reasonable. It now trades for about 1.5 times its projected quarter-end book value based on a Barron’s estimate, against a peak of 1.8 times when the A shares hit a record of around $810,000 on May 2, the day before the Berkshire annual meeting. That was when CEO Warren Buffett surprised shareholders by announcing that he would step down as CEO at year-end after 60 years at the helm. He will remain chairman.

The Buffett news has dampened the stock. Berkshire’s weakness versus the index could also reflect its safe-haven status in market where more offensive and speculative stocks are shining and the underperformance of property and casualty insurance stocks in recent months. Berkshire is the largest P&C insurer measured by its capital—now around $300 billion.

Edward Jones added the Class B shares to its Focus List in conjunction with the upgrade. The B shares ended Friday at nearly $493. They were down 0.3% at $491.25 in premarket trading Monday.

“We believe that the current share price represents an attractive entry point for long-term investors. Berkshire’s revenue and earnings benefit from a diverse group of operating companies, “Shanahan wrote.

“In addition, Berkshire holds almost $350 billion in cash on the balance sheet, which could prove to be a strong earnings catalyst, should the company invest heavily in operating companies, individual stocks and/or Berkshire’s own shares.”

Write to Andrew Bary at andrew.bary@barrons.com