Warren Buffett has taken steps to minimize disruption for the day he steps down from the helm of Berkshire Hathaway Inc , but concern over his succession and a weaker insurance environment limits the stock's growth potential, Barclays Capital said.

Analyst Jay Gelb on Monday began coverage of the insurance and investment conglomerate with an equal weight rating, and respective price targets of $132,000 and $88 for Berkshire's Class A and B shares. That is 9 percent above their Friday closing prices of $121,050 and $80.49.

Gelb said that even with February's takeover of railroad company Burlington Northern Santa Fe Corp, Berkshire's operating earnings appear stalled and may grow only slightly in 2010 and 2011, and the company may see slowing growth in book value and reduced return on equity through 2011.

Growth at the Geico Corp auto insurance unit should slow in 2010 as underwriting margins narrow, while reinsurer General Re may see unchanged premium revenue because of disciplined underwriting and rising catastrophe losses from unusually low levels.

As to succession, Buffett, 79, has said he has three internal candidates to replace him as chief executive, and a few candidates to take over investments at Omaha, Nebraska-based Berkshire.

Gelb said Buffett probably has enough time to set his succession plan in motion to minimize disruption.

He said, though, that the Buffett premium in Berkshire's share price could erode once the world's third-richest person, and perhaps its most admired investor, steps down.

Many analysts consider David Sokol, who chairs Berkshire's MidAmerican Energy unit and has been improving the company's NetJets plane leasing unit, the top candidate to replace Buffett as chief executive. Gelb said Sokol would be successful in that role.

Berkshire Class A shares closed Friday at $121,050, and its Class B shares closed at $80.49.

(Reporting by Jonathan Stempel, editing by Dave Zimmerman)

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