Federated Hermes (FHI) Stock Forecast & Price Target

Federated Hermes manages $843.7 billion in assets as of June 2025, with a significant focus on money market funds (75% of AUM), which are expected to generate approximately 52% of the firm's revenue this year. The company anticipates increased institutional demand for money market funds as the Federal Reserve potentially lowers short-term rates, along with long-term growth opportunities in alternative strategies. Additionally, there is a positive trend in equity net flows, contributing to an improving outlook for equity organic growth, which supports a favorable assessment of the firm's financial performance.

Federated Hermes experienced long-term net outflows of $466 million, which were weaker than anticipated, primarily driven by higher-than-expected outflows in fixed income despite stronger equity inflows. The firm's significant reliance on cash-management operations, set to contribute 52% of revenue, raises concerns given the impact of low short-term interest rates on money market fund yields. Furthermore, the ongoing industry shift towards passive investment products poses a threat to Federated Hermes's actively managed assets under management (AUM), potentially undermining future growth.