Berkshire Hathaway (BRK.A, BRK.B) is poised for strong Q2 results, bolstered by gains in its insurance business, UBS Securities said Wednesday in a report.

The GEICO subsidiary is targeting profitability and growth by increasing its spending on advertising and adopting more competitive pricing strategies, UBS said. Berkshire Re and BH Primary Group will likely benefit from "attractive underwriting results" amid prospects for lighter catastrophe losses, the report said.

Margins at rail subsidiary BNSF may expand by 120 basis points from a year earlier, driven by lower fuel prices and operating efficiencies, UBS said. Still, total traffic volume growth slowed to 1.6% from 5.2% in Q1, the report said.

A report that Union Pacific (UNP) may acquire Norfolk Southern (NSC) spurred speculation that BNSF may look at buying Norfolk Southern rival CSX (CSX) for an estimated $82 billion to $88 billion, UBS said.

UBS raised its 12-month price target on Berkshire Hathaway's B shares to $595 from $591 and boosted the target on A shares to $892,120 from $887,099.

UBS lifted its Q2 earnings estimate for B shares to $5.06 from $5 and increased the estimate on A shares to $7,595 from $7,493.