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Buffett's Latest Stock Bets Face Skepticism from Bank of America Analysts

by Crypto Hobby

Updated August 28, 2025

Warren Buffett leaning over a stock ticker.

As legendary investor Warren Buffett prepares to step down from Berkshire Hathaway, his recent stock picks are drawing attention. However, not all analysts are convinced. Bank of America has expressed reservations about two of Buffett's latest acquisitions: UnitedHealth Group (UNH) and Allegion (ALLE). While Buffett sees value, Bank of America analysts point to potential near-term challenges for both companies.

Key Takeaways

Warren Buffett's recent stock purchases in UnitedHealth Group and Allegion have been met with caution by Bank of America analysts.
UnitedHealth Group (UNH) faces scrutiny due to recent downward guidance revisions and a Department of Justice investigation, despite strong revenue growth.
Allegion (ALLE), a home security firm, is praised for its execution amidst a weak construction market, but its exposure to the residential sector remains a concern.

UnitedHealth Group (UNH): A Mixed Outlook

UnitedHealth Group, the largest health insurer in the U.S., operates through its UnitedHealthcare and Optum divisions, offering a wide array of health benefits and services. Despite its significant market presence and strong revenue growth, the company's stock has experienced a downturn. This decline was exacerbated by a downward revision of its full-year 2025 guidance and a suspension of its outlook in May. Further pressure came from a Wall Street Journal report detailing a Department of Justice criminal investigation into potential Medicare fraud.

Buffett's Berkshire Hathaway recently acquired over 5 million shares of UNH, valued at approximately $1.53 billion. However, Bank of America analyst Kevin Fischbeck maintains a Neutral rating on the stock, citing a slower-than-expected pace of improvement and low visibility in near-term earnings. Fischbeck anticipates "solid but moderate earnings growth in 2026, but accelerating in 2027 and in succeeding years." The analyst has set a price target of $290, suggesting a potential downside of 4.5%.

Allegion (ALLE): Navigating the Construction Market

Allegion, a leader in home security solutions, has also caught Buffett's eye, with Berkshire Hathaway acquiring over 780,000 shares worth about $130 million. The company has demonstrated strong execution, consistently beating earnings per share estimates since August 2022, even as its end markets have been weak. This performance is attributed to new management and sound prospects.

However, Bank of America analyst Andrew Obin highlights Allegion's exposure to the construction industry, particularly the residential sector, which remains soft due to high interest rates. Obin rates the stock as Neutral (Hold) with a price target of $175, implying a 5% gain over the next year. While acknowledging Allegion's consistent execution and the potential bottoming of the non-residential construction market, Obin's caution stems from the ongoing challenges in the residential market.

Diverging Views on Buffett's Picks

The contrasting opinions from Bank of America analysts underscore the complexities of evaluating even the most celebrated investors' choices. While Buffett's long-term value investing philosophy often proves prescient, market conditions and company-specific headwinds can lead to differing short-term outlooks.