Warren Buffett’s Berkshire has a new analyst. He is lukewarm on the conglomerate

Warren Buffett’s Berkshire Hathaway has a new Wall Street analyst covering its stock, and he has mixed feelings about the conglomerate. TD Cowen’s Andrew Kligerman initiated his coverage on the Omaha-based giant with a hold rating on Monday, along with a 12-month price target of $697,000, which would translate into a roughly 7% gain from here. The analyst thinks Berkshire is grappling with weakness in its non-insurance businesses including railroad, utilities service and retail, while its insurance operations continue to outperform. “Berkshire Hathaway’s old-school conglomerate structure has faced challenges in a number of key areas of late despite being powered by an insurance business that continues to shine,” Kligerman said in a note. He noted that Berkshire’s railroad giant BNSF has contended with wage increases and revenue declines, and its utility business BHE faces pressure from damage caused by wildfires. Meanwhile, the analyst thinks Berkshire’s manufacturing, service and retailing businesses are closely tied to the U.S. economy, which continues to battle with inflation. Berkshire’s insurance business has been a bright spot for the conglomerate. For the first quarter, it reported a 185% year-on-year increase in insurance underwriting earnings, driven by the strength in auto insurer Geico. The conglomerate is set to report its second-quarter earnings next month. Shares of Berkshire have rallied more than 20% this year, outperforming the broader market. There are only seven analysts covering the conglomerate at Wall Street’s major equity research firms —four of them have a buy-equivalent rating and four have a hold rating, according to CNBC’s research. — CNBC’s Michael Bloom contributed reporting.