(FII) Federated Investors Incorporated – Bear of the Day

Federated Investors’ (FII) second-quarter 2011 earnings were in line with the Zacks Consensus Estimate. Results reflected decreased top-line growth, increase in voluntary fee waivers, and increased operating expenses. These negatives were further offset by a rise in fixed income and equity assets as well as higher assets under management (AUM).

The regulatory backdrop, volatile equity markets and slow economic growth are anticipated to keep earnings under pressure. Therefore, we maintained our Underperform recommendation on the stock.

Our six-month target price of $17.00 equates to about 11.0x our earnings estimate for 2011. We view the $0.96 per common share annual dividend as secure, implying an expected negative return of about 4.6% over that period.

Zacks Investment Research

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