Kennametal: JP Morgan Maintains Underweight, PT Down to $20 from $23.

Kennametal: JP Morgan Maintains Underweight, PT Down to $20 from $23.

Kennametal Inc. (KMT) faced a challenging fourth quarter in fiscal year 2025, with the company's stock experiencing a significant decline following its earnings report. JP Morgan has maintained its underweight rating on Kennametal, reducing its price target to $20 from the previous $23. The earnings report revealed a miss on both earnings per share (EPS) and revenue compared to analysts' expectations.

The company reported an adjusted EPS of $0.34, falling short of the expected $0.38, while revenue came in at $516.45 million, below the anticipated $527.56 million. This performance resulted in a 27.26% drop in the stock price to $20.99 in pre-market trading [2]. Despite the miss, Kennametal announced a cost reduction program targeting $125 million in savings and set its fiscal 2026 sales outlook between $1.95 billion and $2.05 billion.

The company's Q4 2025 performance was marked by a decline in organic sales by 4% for the fiscal year. Kennametal continued to face challenges in industrial markets, with transportation and earthworks sectors showing signs of weakness. However, the company secured new projects in aerospace, defense, and AI power generation, indicating potential areas for future growth.

JP Morgan's analyst, Tami Zakaria, stated, "While Kennametal has taken significant steps to address its cost structure and improve margins, the company's near-term performance remains challenging. The current market environment, characterized by broad-based weakness across all end markets and regions, continues to pose significant headwinds." The analyst maintained an underweight rating due to concerns about the company's ability to achieve its cost savings targets and the potential for further market softness.

Kennametal's management team underscored its commitment to disciplined execution, rightsizing capacity, and maintaining flexibility for a future market recovery. The company's expanded plant consolidation program, targeting $125 million in structural cost savings, is intended to position the company for sustainable margin improvement and long-term competitiveness. However, near-term conditions remain challenging, and the company faces ongoing risks related to supply chain disruptions, tariff-related headwinds, and elevated raw material costs.

References:
[1] https://seekingalpha.com/news/4480924-kennametal-outlines-125m-cost-savings-target-through-expanded-plant-consolidations-amid
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-kennametal-misses-q4-2025-earnings-expectations-93CH-4173786