Sterne Agee Neutral On Federated Investors Inc. (FII)

Sterne Agee has a Neutral rating and a $27 price target on shares of Federated Investors Inc. FII. In a note to investors, Sterne Agee writes, "We currently view FII shares as fully valued based on our current estimates and the stock's relative P/E multiple (both vs. S&P and the group). With the stock trading at only a modest discount to peers on '11 (adjusted for legal expense) and '12 P/Es, we see better value in names we believe have a better long-term growth outlook and a greater potential for multiple expansion. That said, we view FII as a solid high yielding (~4%) defensive name with less downside risk in an equity market reversal. The biggest upside catalyst we see is a sooner than consensus rise in short-term rates which would drive roughly $0.35 of higher EPS on an annual basis (based on our current estimates) and presumably lead to some short covering." Shares of FII are up 5 cents this morning to trade at $25.83, a gain of 0.2%.