Kennametal Surges 10.35% as Tungsten Price Rally Ignites Investor Optimism

Summary
• Kennametal (KMT) surges 10.35% intraday, trading at $33.90, near its 52-week high of $34.14
• Jefferies upgrades KMT to 'Buy' with a $40 price target, citing 190% YOY tungsten price surge
• Morgan Stanley raises KMT's price target to $29, reflecting sector-wide confidence in cyclical recovery

Kennametal’s explosive 10.35% rally on January 13, 2026, has thrust the industrial tools giant into the spotlight. With the stock trading at $33.90—just $0.24 shy of its 52-week high—analysts are scrambling to reassess its trajectory. Jefferies’ recent upgrade to 'Buy' and Morgan Stanley’s $29 price target highlight a confluence of factors: surging tungsten prices, structural cost cuts, and a resilient earnings profile. The move has outpaced its Tools & Accessories sector peers, including Stanley Black & Decker’s modest 0.35% gain, signaling a potential inflection point for the cyclical play.

Tungsten Price Surge Fuels Earnings Optimism
Kennametal’s meteoric rise stems from a perfect storm of commodity tailwinds and strategic positioning. Jefferies’ upgrade to 'Buy' explicitly ties the stock’s momentum to a 190% year-over-year surge in tungsten prices, a critical input for the company’s metal-cutting tools. With tungsten prices up 47% since November alone, Kennametal’s near-term earnings are poised to benefit from immediate price pass-through while delayed cost inflation remains muted. The firm’s 4.76% net margin and 7.56% ROE further underscore its ability to convert commodity gains into shareholder value. Analysts also highlight structural cost cuts and operating leverage as catalysts, with Jefferies modeling 8x CY26 EBITDA multiples to justify the $40 price target.

Tools & Accessories Sector Gains Momentum as KMT Outpaces Peers
The Tools & Accessories sector, led by Stanley Black & Decker’s 0.35% gain, has seen mixed performance amid broader industrial recovery. Kennametal’s 10.35% surge, however, dwarfs sector averages, driven by its unique exposure to tungsten price dynamics. While peers like Lincoln Electric (LECO) and The Timken Company (TKR) remain flat, KMT’s dual-engine business model—combining metal-cutting tools and infrastructure components—positions it to capitalize on both cyclical and structural trends. The sector’s 1.48 average beta suggests heightened sensitivity to macroeconomic shifts, making KMT’s commodity-driven momentum particularly compelling in a tightening rate environment.

Options Playbook: Leveraging KMT’s Bullish Momentum with Gamma-Driven Contracts
• MACD: 0.73 (above signal line 0.67), RSI: 72.4 (overbought), 200D MA: $23.18 (well below current price)
• Bollinger Bands: $27.92 (lower) to $30.51 (upper), with current price at $33.90 (outside upper band)
• Key Levels: 200D support at $21.76, 30D support at $27.79; 52W high at $34.14 as critical resistance

Kennametal’s technicals scream short-term overbought conditions, yet the stock’s 10.35% surge suggests momentum is unrelenting. Traders should focus on gamma-positive, high-leverage options to capitalize on the volatility. Two standout contracts from the options chain are:

• KMT20260220C30
- Strike: $30, Expiration: Feb 20, IV: 43.93%, Leverage: 7.55%, Delta: 0.827, Theta: -0.0226, Gamma: 0.0518, Turnover: 14,230
- IV (43.93%) suggests moderate volatility expectations; Leverage (7.55%) amplifies returns on a 5% upside move (projected payoff: $1.65 per contract). Gamma (0.0518) ensures delta sensitivity to price swings, ideal for a volatile short-term trade.

• KMT20260717C35
- Strike: $35, Expiration: July 17, IV: 27.44%, Leverage: 14.78%, Delta: 0.489, Theta: -0.008, Gamma: 0.0591, Turnover: 4,600
- IV (27.44%) balances risk and reward; Leverage (14.78%) offers asymmetric upside if the 52W high is cleared. Gamma (0.0591) and Theta (-0.008) suggest a time-insensitive, directional play suited for a mid-term holding period.

Aggressive bulls should prioritize KMT20260220C30 for its gamma-driven responsiveness to near-term volatility, while KMT20260717C35 offers a more conservative, time-insensitive position. Both contracts align with Kennametal’s 8.99% YTD outperformance and Jefferies’ $40 price target.

Backtest Kennametal Stock Performance
The backtest of KMT's performance after a 10% intraday increase from 2022 to the present shows mixed results. While the 3-Day, 10-Day, and 30-Day win rates are relatively high, indicating a higher probability of positive returns in the short term, the overall returns over these periods are negative, with a maximum return of only 0.71% over 30 days.

Breakout or Bubble? KMT’s 52W High is the New Battleground
Kennametal’s 10.35% surge has positioned it at a critical juncture: a $34.14 52-week high breakout could validate the $40 price target, while a pullback to $27.92 (lower Bollinger Band) would test the trade’s sustainability. Traders should monitor the 200D MA at $23.18 as a floor and the 30D support at $27.79 as a near-term pivot. Meanwhile, sector leader Stanley Black & Decker’s 0.35% gain underscores the need for KMT to outperform its peers to justify its 27.68x P/E. For those with a bullish bias, KMT20260220C30 offers a high-gamma, high-leverage play on the 52W high breakout. If the move stalls, a short-term pullback to $30.50 (upper Bollinger Band) could present a re-entry opportunity.