Warren Buffett announced in May this year that he would step down as chief executive officer of Berkshire Hathaway (NYSE: BRK.A) in January 2026.
As expected, the news had a substantial impact on the market, as the company’s stock had been nearing its all-time highs, leaving investors speculating as to what the future might bring.
Now, some five months later, the numbers indeed paint a somewhat depressing picture, as the Omaha-based conglomerate has been underperforming the S&P 500 by nearly 28% since Buffett’s announcement.
Namely, while SPDR S&P 500 ETF Trust (SPY) has delivered gains of 18.75%, the holding company has witnessed losses of 8.28%, as per the data Finbold retrieved from Barchart.
Wall Street not giving up on Berkshire Hathaway yet
While Barchart data looks like a reason for pessimism at first glance, analysts are still positive that Buffett’s holding company can continue to deliver desired results.
On October 15, for example, UBS slightly lowered its BRK.B price target from $597 to $593 but maintained a “Buy” rating on the stock, remaining confident in its long-term fundamentals.
As of the time of writing, the average BRK.B stock price target for the next 12 months is $536.67, a figure 9.12% higher than the current price of $491.81, based on a total of three ratings on the market tracking platform TipRanks.
Despite UBS’s slightly lower price, the financial services firm raised its third-quarter earnings per share (EPS) estimates for the company from $5.57 to $5.89, citing robust insurance operations.
Similarly, the full-year EPS forecast was set at $20.78, while Berkshire’s book value per share is expected to rise 2.1% sequentially. Moreover, UBS also noted that the stock currently trades near its intrinsic value.
S&P 500 near its historic highs
It is noteworthy that the S&P 500 is nearing its peak, with a Bank of America (BofA) research report published on Monday, October 20, actually calling the valuation dangerous territory, as 60% of the bear market indicators under scrutiny were flashing red.
The warning came amid growing unease with the so-called AI bubble. For instance, Morgan Stanley’s Lisa Shalett compared the rally to the hype around Cisco (NASDAQ: CSCO) in 2000, noting in an interview with Fortune that AI now drives 75% of S&P 500 gains.
Furthermore, the research report noted that government shutdowns and renewed trade tensions have made investors more cautious than ever, suggesting the current euphoria may only lie on the surface, masking what is truly market fragility.
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