Berkshire reported strong earnings. But Wall Street is

Opinions varied between optimism about the company's improving insurance sector and uncertainty about succession.

The Omaha-based company said operating income from its various businesses, including insurance, railroads, and energy, rose 34% to $13.49 billion in the third quarter from a year earlier. The jump was driven by a more than 200% increase in insurance underwriting income, reaching $2.37 billion, reflecting a reduction in catastrophe losses and improved results from auto insurance company Geico.

Despite the strong results, Berkshire's Class A shares remained flat on Monday. Berkshire shares have fallen more than 10% from their peak in early May, just before Buffett announced his intention to step down as CEO at the end of the year, ending his six-decade tenure.

This surge in profits came as Berkshire's cash reserves rose to $381.6 billion, surpassing the previous record set earlier this year.

Buffett also refrained from share repurchases for the ninth consecutive month. This decision reinforced his belief that the stock's valuation has reached its full potential, although it has significantly lagged the S&P 500 this year.

KBW said Berkshire shares appeared "weak" after earnings as Buffett prepares to step down as CEO at the end of the year, citing high valuations and leadership uncertainty.

The firm, which recently downgraded Berkshire shares to a "sell" rating, said the stock, trading at 22.2 times estimated 2026 earnings and 147% of second-quarter book value, could face pressure amid broader challenges and "near-term earnings pressure at GEICO, investment income, and BNSF."

CFRA's Catherine Seifert offered a more restrained view. While praising the strong quarter, she cautioned that the 9.4% decline in insurance loss costs is unsustainable and that Berkshire's record cash reserves, without any buybacks, indicate that management views the shares as fairly valued.

"At current levels, we believe the shares are reasonably valued and there are no near-term catalysts for further upside, given slow revenue growth, the absence of buybacks, and the upcoming C-suite change following Warren Buffett's departure."

Restore confidence?

Others were more upbeat. Edward Jones said new CEO Greg Abel could "restore investor confidence over time" and pointed to renewed investment activity or potential share repurchases as potential near-term catalysts.

Following sharp underperformance associated with the news of Buffett's retirement, the company recently upgraded Berkshire to buy from hold.

UBS remained constructive, highlighting strong insurance results, BNSF's outperformance, and the company's defensive position in an uncertain economy.

The firm said, "We believe Berkshire shares are attractive given its defensive business position in an uncertain macro environment, strong cash position, and improving GEICO (which should support the float)."