KBW Slashes Berkshire to Underperform, Citing Post-Buffett Risk and Profit Squeeze

$Berkshire Hathaway(BRK.B)$ : Rare Wall Street Downgrade to "Underperform" on Succession and Profit Concerns

In an unusual move, Keefe, Bruyette & Woods (KBW) has downgraded Berkshire Hathaway Class A shares from "Market Perform" to "Underperform"—the only "sell" rating among analysts tracked by Bloomberg. Key concerns:

1. Earnings Pressure: GEICO's underwriting margin may have peaked, catastrophe-reinsurance rates are sliding, and lower short-term rates will compress investment income.

2. Operating Headwinds: Railroad volumes are tariff-hit, and renewable-energy tax credits are fading.

3. Succession Risk: Investors remain wary of capital-allocation quality once Warren Buffett departs.

KBW cut its price target to $700,000 (from $740,000) and trimmed 2026-27 EPS estimates. BRK.A and BRK.B fell 0.79 % and 0.82 % respectively Monday.