Morgan Stanley cuts Kennametal stock rating on tungsten price impact
Morgan Stanley downgraded Kennametal (NYSE:KMT) to Underweight from Equalweight and cut its price target to $27 from $31. The firm cited a tungsten price spike of over 500% since Aug 2025 and the temporary raw-material timing benefit. Kennametal guided FY2027 EPS $4.15 to $5.15, including $3.50 benefit.
How this was made
The 30-second read
Why it matters
The downgrade and lower price target shift the market’s focus from headline margin expansion to the expected unwinding of the embedded raw-material timing benefit in FY2027 guidance, raising perceived earnings risk.
Market read
A concrete sell-side downgrade with a quantified tungsten-timing thesis can drive near-term repricing of KMT’s earnings quality and valuation multiple.
What to watch
The article notes strong fiscal Q4 adjusted EPS and revenue versus expectations, so some of the margin strength may reflect operational execution beyond raw-material timing.
Background
Morgan Stanley’s note centers on tungsten prices surging more than 500% since August 2025 and how Kennametal’s faster pass-through to customers temporarily lifts margins.
Ticker impact
Morgan Stanley downgraded Kennametal to Underweight and cut its price target to $27 from $31, citing a tungsten price spike’s margin timing effects.
Near term, expect pressure on KMT as investors price in unwinding of the $3.50 raw-material timing benefit embedded in FY2027 guidance.
The article provides explicit analyst action (downgrade and lower PT) plus a quantified thesis: tungsten up >500% since Aug 2025, margins boosted by faster pass-through, and Morgan Stanley expects the benefit to unwind over the next 12 months.
Market effects
Highlights how commodity-driven input cost pass-through can distort margins for industrials, increasing sensitivity to normalization assumptions.
Primarily US industrials sentiment via a sell-side rating change on a NYSE-listed name.
Tungsten price volatility can transmit to global metal supply chains and equipment makers’ earnings quality.
Counterpoint
The same tungsten-driven timing benefit that Morgan Stanley flags could persist longer if customer pricing power and inventory cycles remain favorable, limiting the speed of EPS normalization.
Key entities
- companyKennametal
NYSE-listed industrial materials and components maker; subject of the downgrade and price-target cut.
- analyst_firmMorgan Stanley
Issued the Underweight rating and reduced the price target to $27 from $31.
- commodityTungsten
Input material whose price spike is used to explain temporary margin and EPS effects.
