Federated Hermes downgraded to Underweight from Neutral at JPMorgan

JPMorgan downgraded Federated Hermes (FHI) to Underweight from Neutral with a price target of $41, down from $42. While Federated has some strong performance in its MTD fund franchise, overall performance is “mediocre” and fund flows generally edge to redemptions, the analyst tells investors in a research note. The firm says governance remains an issue, with the CEO owning very little stock. It thinks this contributes to shareholder unfriendly decisions such as enabling Federated’s expulsion from the Russell. JPMorgan does not see the management team reversing governance decisions despite operating a large impact investing consultancy. As such, the firm sees modest upside for the shares. It believes Federated shares will underperform peers over time on slower organic growth.