The Zacks Analyst Blog Highlights: Berkshire Hathaway, Tesla Motors, SolarCity, Daimler and Ford Motor

Dec 06, 2013, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Dec. 6, 2013 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Berkshire Hathaway Inc. (NYSE: BRK.B-Free Report), Tesla Motors, Inc. (Nasdaq: TSLA-Free Report), SolarCity Corporation (Nasdaq: SCTY-Free Report), Daimler AG (OTC:DDAIF-Free Report) and Ford Motor Co. (NYSE: F-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday's Analyst Blog:

Berkshire Hathaway Drops to Neutral


On Dec 5, 2013, we are downgraded our recommendation on Berkshire Hathaway Inc. (NYSE: BRK.B-Free Report) to Neutral from Outperform following third quarter earnings miss wherein the company gave a negative surprise of 6.9%. The company carries a Zacks Rank #3 (Hold).


Why Downgrade?

Berkshire reported third quarter 2013 operating earnings of $1.49 per share, missing the Zacks Consensus estimate of $1.60 per share. The earnings miss came from a decline in underwriting income from the company's insurance business, due to cat loss suffered during the quarter.


Berkshire earnings are subject to volatility, given its exposure to catastrophes. Going forward, we believe that the timing and magnitude of catastrophe and large individual losses will continue to produce significant volatility in its property and casualty underwriting results.


Also the succession of Warren Buffett, the CEO and Chairman of Berkshire remains a concern with the investors.  Though Buffett has put in place a succession plan and has chosen a successor, the names of the to-be CEO remain under a veil. Therefore, there remains an air of uncertainty regarding the performance of the company under a new CEO.


Moreover the company's huge investment in derivative contract imparts volatility to the company's earnings.


Following earnings release, Zacks Consensus Estimate for 2014 earnings went down as 1 out of 2 its estimates moved south by 0.5% to $6.22 per share.


Tesla Batteries in SolarCity Systems


Tesla Motors, Inc.'s (Nasdaq: TSLA-Free Report) batteries will be offered along with SolarCity Corporation's (Nasdaq: SCTY-Free Report) commercial solar systems. Tesla's batteries will be providing a backup power source to its customers and support in reducing the consumption of electricity and hence the electric bill.


Solar systems need to depend on sunlight. However, Tesla's batteries will help the customers in times of solar blackout as well. In addition, Tesla's batteries will provide an alternative source of energy during power cuts. The batteries will help the functioning of critical systems for several hours or for several days if it gets charged from the solar energy during the day time.


Moreover, commercial consumers have to pay charges for the entire amount of electricity they may need from the grid at any one time. This is known as demand charges in the electric industry. The solar panels and Tesla's battery packs intend to reduce those demand charges. It is expected that the addition of Tesla's batteries will reduce demand charges by 20%.


In today's world, efficiency programs together with advanced appliances are helping the customers to decrease their energy consumption. Solar panels and other power sources like Tesla's batteries are providing alternative energy sources. Eventually, this is reducing the demand charges and creating a softer market for electricity sales.


SolarCity will install Tesla's batteries in the systems at no extra cost. Rather, the batteries will charge 20% less than the local utility's demand charges. At present, the batteries will only be available at places with high demand charges. The places include California, Massachusetts and Connecticut.


Tesla designs and manufactures electric vehicles and electric vehicle powertrain components. The company currently retains a Zacks Rank #3 (Hold). SolarCity is a provider of solar power service, monitoring and maintenance services to homeowners, businesses, schools, non-profits, and government organizations in the U.S. SolarCity presently retains a Zacks Rank #3. Elon Musk, the founder of Tesla, owns about 73% of SolarCity.


Other major automobile stocks worth considering are Daimler AG (OTC:DDAIF-Free Report) and Ford Motor Co. (NYSE: F-Free Report). Both carry a Zacks Rank #2 (Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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