FHI - Federated Hermes raised to Overweight at J.P. Morgan on MMF growth prospects

2023-04-11 09:21:04 ET

• Federated Hermes ( NYSE: FHI ) stock gapped up 2.1% in Tuesday premarket trading after J.P. Morgan upgraded shares of the investment manager to Overweight from Underweight on expectations that it will benefit from a bigger money market fund market amid high interest rates.
• As higher rates, along with pressures in the banking system, prompt investor and financial institutions to move their cash into money market funds, Federated ( FHI ) is set to take market share (currently at 7.1%) as it has a greater money market presence with financial intermediaries, analyst Kenneth Worthington wrote in a note.
• In addition, the company is expected to benefit "from a better environment for fixed income, with its franchise overweight fixed income investing especially in short/ ultra short fund, which we see migrating to a strong position of growth in a falling rate environment," the note said.
• Worthington's Overweight rating converges with the Quant system rating and the average Wall Street analyst rating, both at Buy.
• For the fourth quarter, Federated ( FHI ) profit and revenue each fell short of Wall Street expectations as expenses swelled.

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