On Monday, Evercore ISI adjusted its price target for Federated Hermes Inc. (NYSE:FHI), a global investment manager, increasing it to $37 from $36, while maintaining an Outperform rating on the stock.
The revision reflects the company's continued share repurchase efforts, which have notably reduced the average share count by 6% year-over-year in the second quarter. This marks the fifth consecutive quarter of significant share buybacks, with approximately 1.8 million shares remaining, equating to 2.5% of the outstanding shares.
Management at Federated Hermes has signaled its intention to remain active in repurchasing shares. The company's strategy to stabilize its operations is anticipated to provide an opportunity to expand and diversify into growing, non-core-style areas. Additionally, the firm is looking to engage in forward-looking deals and increase its market share in money market funds.
The analyst's report also includes updates on the company's second-quarter operating metrics and forward-looking information. The expectation of a better flow trend is seen as a positive sign that could enable Federated Hermes to concentrate on growth and diversification.
The earnings per share (EPS) estimates for the years 2024 and 2025 have been adjusted to $2.85 and $3.88, respectively, from the previous estimates of $3.64 and $3.90. This change is attributed to slightly increased expenses and a higher tax rate. The new price target of $37 reflects these updated estimates and the ongoing share repurchase program.
InvestingPro Insights
Recent data and analysis from InvestingPro further underline the strength of Federated Hermes Inc. (NYSE:FHI) in the current market. The company boasts a solid market capitalization of $2.76 billion, demonstrating its substantial presence in the investment management sector. With a Price-to-Earnings (P/E) ratio of 11.91, FHI presents an attractive valuation compared to industry peers, especially when considering the adjusted P/E ratio of 11.77 for the last twelve months as of Q2 2024.
InvestingPro Tips highlight the company's prudent financial management, with aggressive share buybacks and a consistent dividend payout for 27 consecutive years. These actions reflect a commitment to shareholder returns and financial stability. The company's liquidity is also noteworthy, with liquid assets surpassing short-term obligations, ensuring operational resilience.
For investors seeking more insights, InvestingPro offers additional tips, including analysts' upward revisions of FHI's earnings and predictions of profitability for the year. To access these insights and more, investors can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. Currently, there are 7 additional InvestingPro Tips available for FHI at https://www.investing.com/pro/FHI, which can provide investors with a deeper understanding of the company's potential.
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