updated 3/1/2010 2:20:52 PM ET 2010-03-01T19:20:52

Warren Buffett's Berkshire Hathaway Inc. stock has been downgraded by an analyst concerned about the weak economy and the prospects for property and casualty insurance businesses.

Keefe, Bruyette & Woods analyst Cliff Gallant said the fourth-quarter earnings Berkshire released Saturday showed the company's insurance businesses performing well while its other operating units delivered stable, but not spectacular results.

Gallant said in a research note Monday that he was downgraded Berkshire's shares from "Outperform" to "Market Perform" and reducing his earnings estimates because of concerns about the economic environment.

Berkshire, based in Omaha, reported Saturday that it earned $3.056 billion, or $1,969 per Class A share, during the fourth quarter, up from $117 million, or $76 per share, a year ago.

Revenue jumped nearly 23 percent to $30.2 billion.

Buffett's company benefited in the quarter from a $1.03 billion gain on the value of its investments and derivatives contracts. A year ago, largely unrealized losses of $3.3 billion from the investments and long-term derivative contracts hurt Berkshire's profit.

Many of Berkshire's operating businesses, such as MidAmerican Energy, Shaw Carpet, NetJets and Acme Brick, have been hurt by the recession. But Berkshire's insurance unit, which includes Geico and General Reinsurance, delivered strong operating profit.

Gallant says he expects it to become harder for Berkshire's insurance businesses to continue delivering strong underwriting profits this year because of increased competition.

Berkshire's Class B shares rose 65 cents to $80.78 in afternoon trading Monday while its Class A shares rose $1,551 to $121,351.

Gallant said Berkshire's shares are now "nearing an appropriate valuation. Longer term, we view that Berkshire will produce impressive operating earnings growth."

Berkshire owns roughly 80 subsidiaries, including clothing, furniture, jewelry and corporate jet firms, but its insurance and utility businesses typically account for nearly half of the company's revenue. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.

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