You are here: Home » Reuters » News
Business Standard

Berkshire may get $37 billion book value boost from U.S. tax cuts - Barclays


By Jonathan Stempel

(Reuters) - Hathaway Inc , the conglomerate run by Warren Buffett, may see its book value grow by $37 billion because of U.S. changes enacted by Donald Trump, Capital analysts estimated on Monday.

Book value, a key performance measure for reflecting assets minus liabilities, probably rose by 12 percent in the final quarter of 2017 because can lower its bill on investments that have risen in value, analysts led by wrote.

That would leave valued at about 1.39 times book value, which Gelb called "attractive," though it would remain above the 1.2 ratio that could prompt to authorize share repurchases.

has said it ended September with $86.6 billion of income liabilities, which were mainly deferred.

Gelb, who rates "overweight," also said lower taxes could boost by 12 percent the earnings power from Berkshire's more than 90 operating units, such as the BNSF railroad and

Though the changes would not add to the Omaha, Nebraska-based company's roughly $109 billion of cash and equivalents, Gelb said any large all-cash acquisition would likely immediately boost Berkshire's earnings per share.

Trump last month signed into a reduction in the corporate income rate to 21 percent from 35 percent.

had told CNBC in October that if the corporate rate changed significantly in 2018, "it would pay me something."

Through 2016, Berkshire's book value per share grew at an annualized 19 percent since took over the company in 1965. That topped the 9.7 percent annualized gain in the Standard & Poor's 500 including dividends. does not pay a dividend.

on Monday also raised its price target for Class A shares to $357,000 from $322,500, three weeks after the shares reached $300,000 for the first time. It raised its target for Class B shares to $238 from $215.

usually releases year-end results and Buffett's annual shareholder letter on the last Saturday in February.

In afternoon trading, Class A shares were up $1,575 at $303,100, and Class B shares were up 64 cents at $202.06. Both share classes rose 22 percent in 2017.

(Reporting by in New York; Editing by Phil Berlowitz)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 09 2018. 00:35 IST