Federated Hermes (FHI) Beats Earnings Estimates, Shares Climb 3.5%
Federated Hermes, Inc. (FHI) delivered upbeat financial results for the third quarter, exceeding analysts’ expectations on earnings per share but falling slightly short on revenue. The company reported earnings of $1.06 per share, surpassing the consensus estimate of 91 cents per share. However, its revenue of $408.456 million fell short of the projected $409.260 million.
Despite the revenue miss, Federated Hermes saw significant growth in its assets under management, reaching a record high for the eighth consecutive quarter. This positive trend was driven by strong inflows into money market and fixed-income products, as well as appreciation in equity and fixed-income assets. The company’s president and chief executive officer, J. Christopher Donahue, attributed the growth to the Fed’s recent rate cut, as money market products offer competitive yields compared to bank deposits and certain securities in the direct market.
Federated Hermes also witnessed increased demand for its Total Return Bond Fund and core plus strategies, which are strategically positioned to adapt to evolving market conditions. The company experienced positive net flows in nine of its high-performing Federated Hermes MDT quantitative mutual funds and ETFs, further bolstering its equity performance.
Following the earnings announcement, analysts adjusted their price targets on Federated Hermes. TD Cowen analyst Bill Kirk upgraded FHI from Hold to Buy and raised the price target from $35 to $46. Meanwhile, RBC Capital analyst Kenneth Lee maintained a Sector Perform rating but increased the price target from $36 to $39.
The positive earnings report and analysts’ optimistic outlook propelled FHI shares to a 3.5% gain, closing at $39.97 on Monday. Investors are taking note of Federated Hermes’ strong financial performance and its ability to navigate the evolving market landscape, making it a stock worth watching closely.
