Federated Hermes (FHI) Stock Forecast & Price Target

Federated Hermes reported $843.7 billion in managed assets as of June 2025, with a substantial 75% of those assets allocated to money market funds, highlighting the firm's strong emphasis on cash-management operations, which are projected to contribute around 52% of revenue this year. There is a positive outlook for equity organic growth, attributed to better-than-expected trends in equity net flows, suggesting the potential for increasing demand from institutional investors. Additionally, opportunities for growth in alternative strategies may enhance Federated's long-term performance, especially as expectations for short-term rate cuts by the Federal Reserve could boost money market fund demand.

Federated Hermes is experiencing long-term net outflows of $466 million, indicating a decline in overall asset management despite stronger-than-expected equity inflows and significantly higher-than-anticipated fixed-income net outflows. The firm's substantial reliance on cash-management operations, which are expected to contribute 52% of revenue, raises concerns about its ability to diversify and sustain growth, especially given the anticipated reduction in yields due to low short-term interest rates. Additionally, the ongoing industry shift toward passively managed products poses a threat to Federated's actively managed assets under management (AUM), potentially exacerbating its financial challenges in an increasingly competitive market.