Federated Hermes (FHI) Stock Forecast & Price Target

Federated Hermes reported $871.2 billion in managed assets as of September 2025, with a significant emphasis on money market funds, which constituted 75% of the portfolio. The firm's revenue is predominantly derived from its cash management operations, expected to contribute approximately 53% this year, bolstered by anticipated increased institutional investor demand for money market funds as the Federal Reserve potentially cuts short-term rates. Furthermore, the improving outlook for equity organic growth and favorable macroeconomic conditions suggest promising long-term growth opportunities, particularly within alternative strategies.

Federated Hermes is experiencing long-term net outflows of $466 million, which is weaker than expected, primarily due to significantly higher than anticipated fixed-income net outflows, despite stronger equity net inflows. The firm’s revenue is heavily reliant on cash management operations, projected to generate 53% of total revenue, raising concerns about vulnerability to low short-term interest rates affecting money market fund yields. Additionally, an industry shift towards more passively managed products poses a risk to the AUM of Federated’s actively managed offerings, further exacerbating challenges to its financial performance.