Federated Hermes (FHI) Stock Forecast & Price Target

Federated Hermes reported managed assets of $843.7 billion as of June 2025, with a significant emphasis on money market funds, which constitute 75% of managed assets, indicating a robust cash-management operation expected to generate approximately 52% of its revenue this year. The firm is seeing an improving outlook for equity organic growth, as evidenced by better-than-expected equity net flows, which positions it favorably within the evolving market landscape. Additionally, the potential for increased institutional investor demand for money market funds as the Federal Reserve begins to cut short-term rates, coupled with longer-term growth opportunities in alternative strategies, further enhances the firm's prospects.

Federated Hermes faces a challenging outlook as evidenced by long-term net outflows of $466 million, driven primarily by significant fixed-income net outflows that overshadowed stronger equity inflows. Additionally, the company's heavy reliance on cash-management operations, projected to generate 52% of its revenue, exposes it to interest rate risks, particularly in a low short-term rate environment, which could diminish yields from money market funds (MMFs). Furthermore, an industry shift towards passively managed products poses a threat to Federated's actively managed assets under management (AUM), potentially impacting future growth and profitability.