What Happened?

Shares of industrial materials and tools company Kennametal (NYSE: KMT) jumped 8.6% in the afternoon session after Jefferies upgraded the stock to Buy from Hold and raised its price target to $40 from $28, citing an unprecedented spike in tungsten prices. 

The upgrade followed a massive surge in tungsten prices, which had risen 190% year-over-year and 47% since November. Analysts at the firm explained that this price jump was expected to significantly boost Kennametal's near-term earnings and margins. The positive outlook provided investors with potential returns while they waited for early signs of recovery in short-cycle markets. This news added to the company's recent strong performance, as Kennametal had previously reported first-quarter fiscal 2026 results that exceeded Wall Street's expectations for both earnings and revenue.

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What Is The Market Telling Us

Kennametal’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock gained 2.9% on the news that markets rotated out of tech names to position themselves for a massive injection of government spending. The sector was ignited by President Trump's call for a $1.5 trillion defense budget for 2027, a significant increase that sent defense contractors surging. Northrop Grumman jumped over 10% and Lockheed Martin gained nearly 8%, acting as the primary engine for the sector's outperformance. Beyond the immediate defense rally, the industrial sector benefited from a broader stabilization in energy costs, with crude prices rebounding. This combination of policy-driven demand and stabilizing input costs made heavy industry an attractive destination.

Kennametal is up 14.6% since the beginning of the year, and at $33.23 per share, has set a new 52-week high. Investors who bought $1,000 worth of Kennametal’s shares 5 years ago would now be looking at an investment worth $860.63.

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