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Analyst Blog

On Jul 2, 2013, Zacks Investment Research upgraded Berkshire Hathaway Inc. (BRK.B - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Reasons for Upgrade

Berkshire Hathaway has been witnessing rising earnings estimates on the back of strong first-quarter 2013 results, which included a 52.31% positive earnings surprise. With the first-quarter earnings beat, this investment manager delivered three straight quarters of positive earnings surprise with an average beat of 22.6%.

The year-to-date return for the stock came in at 25.4%, comfortably above the S&P 500’s return of 13.2%.

Berkshire Hathaway has been working towards consolidating its operations so that it can cater to its clients better. To provide its customers with long-term property and casualty facilities, the company introduced Berkshire Hathaway Specialty Insurance – the commercial property casualty insurance group last month. The company aims at capitalizing on the opportunities provided by U.S. excess and surplus lines insurance Market.

Moreover, in order to fortify its business Berkshire Hathaway acquired the remaining 20% stake of IMC International Metalworking Companies for $2.05 billion in May 2013. Berkshire Hathaway has been in association with IMC for the past seven years and over this period of time IMC has delivered significant growth. The strong operational performance of IMC is expected to bolster the company financials going forward.

It also scores strongly with the credit rating agencies on account of its continued solid operational performances

The Zacks Consensus Estimate for 2013 increased 5% to $5.66 per share as 1 of 2 estimates was revised higher over the last 60 days, reflecting a year-over-year increase of 11.52%. Over the same time frame, the Zacks Consensus Estimate for 2014 increased 6.7% to $6.22 per share, representing a year-over-year increase of 9.9% as 1 of 2 estimates moved north.

Other Stocks to Consider

Among other stocks, American Safety Insurance Holdings Ltd. , Catlin Group Limited (CLNGF) and Endurance Specialty Holdings Limited (ENH - Snapshot Report) carry a Zacks Rank #1 (Strong Buy) and appear impressive.

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