Analysts from S&P Capital and Credit Suisse recently weighed in on Warren Buffett’s investment giant Berkshire Hathaway Inc. (NYSE:BRK.A) and US financial services giant Bank of America Corp (NYSE:BAC). The analysts reflect on Berkshire’s upcoming earnings and BAC’s Alastair Borthwick recent presentation.
Berkshire Hathaway Inc.
With Berkshire Hathaway preparing to release earnings, S&P Capital analyst Catherine Seifert weighed in with a few expectations. The analyst reiterated a Buy rating on the stock, with a price target of $157, which represents a potential upside of 18.5% from where the stock is currently trading.
Seifert wrote, “We forecast revenue growth of 7% to 10% in 2015, and 8% to 12% in 2016. This reflects contributions from acquisitions and assumes that contributions from several of Berkshire’s economically-sensitive units begin to see some momentum amid a recovering economy, particularly in 2016. We look for revenue growth in the insurance area (Berkshire’s largest business) to be above industry averages, primarily reflecting market share gains at GEICO, offset by reduced writings at certain reinsurance units.”
“We estimate operating EPS of $7.15 in 2015, and $8.35 for 2016 — versus the $6.71 Berkshire earned on an operating basis in 2014, we estimate,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Catherine Seifert has a yearly average return of 8.2% and a 90.0% success rate. Seifert is ranked #878 out of 3637 analysts.
Bank of America Corp
In addition, Credit Suisse analyst Susan Roth Katzke reiterated an Outperform rating on shares of Bank of America, with a price target of $20, following presentation of Alastair Borthwick, Bank of America’s Head of Global Commercial Banking, at the Credit Suisse Financial Services Conference, which took place in Miami, FL, on February 8-9.
Katzke wrote, “Consistent with the mandate across Bank of America, management of Global Banking is equally as focused on organic growth– staying focused on its target clients and staying strictly within its established risk parameters. The focus is on organic growth; the driver is the bank’s broad product set and geographic reach.”
Furthermore, “Consistent with what we’ve heard from senior management, there is an equally as concerted an effort to drive unnecessary expense out of the Global banking business unit. In Global Banking, savings are being driven by both focus as well as investments in technology and products (examples include CashPro and Digital Disbursements) that are automating processes and thereby reducing costs. There’s no lack of investment for growth; we see the investment in not just technology and product, but also in net headcount and the growth in sales professionals.”
The analyst concluded, “We continue to recommend purchase of BAC shares and rate the stock Outperform. Organic revenue growth, expense initiatives and evidence of effective risk management (positioning to pass CCAR 2016; manageability of credit cost increases) are critical to sustained share price outperformance.”
As of this writing, out of the 10 analysts polled by TipRanks (in the past 3 months), 8 rate Bank of America stock a Buy, while 2 rate the stock a Hold. With a return potential of 50.5%, the stock’s consensus target price stands at $18.75.