Berkshire profit estimates cut in half by Buffett's letter



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Barclays analyst Jay Gelb on Friday halved his earnings per share estimates for Berkshire Hathaway, saying Kraft Heinz's decision to reduce its dividend, as well as the release of information subject to regulatory scrutiny, will raise big problems.

Gelb has reduced the estimate of fourth quarter EPS of its Berkshire A share from 1,722 USD to 1,226 USD and from 2,35 USD to 1,15 USD for the shares B. Berkshire is expected to publish its fourth quarter results Saturday.

The problems with Kraft Heinz are not the only problems that Berkshire is facing. Last year was tough for insurers, and the conglomerate is riding high.

"The most recent quarter also included significant catastrophe losses for the global market. [property and casualty] Insurance sector "due to Hurricane Michael and California wildfires" which should also have a negative impact on Berkshire's profits, "said Gelb.

For the full year, Gelb reported its projected profit at $ 15,316.88, compared to $ 15,112.15 for A shares and $ 8.88 for B shares, compared to $ 10.07 for B shares, both of which represent 12% reduction.

Despite income problems, the analyst maintained his price target for both classes, which he considers to be $ 375,000 and $ 250 respectively. The targets represent an increase of 21.8% for the two shares at the close of Thursday.

Kraft Heinz saw its shares collapse after the company announced that it would reduce its dividend to 40 cents per share, a 36% reduction, and that it had been subpoenaed. of the Securities and Exchange Commission regarding accounting rules for purchases.

This is in addition to profits and revenues that have exceeded Wall Street estimates.

Gelb said he expects Buffett to address a number of topics this weekend, including plans for his estate, what the company will do with its more than $ 80 billion in cash stocks, the possibility of stock buybacks, his views on global issues and the current state of affairs. the BNSF railway and the company's energy investments.

-Blan Bloom from CNBC contributed to this report.

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