Kennametal (KMT) faces a balanced outlook for fiscal 2026 amid reduced macroeconomic risks and the absence of near-term downside catalysts. following two years of negative organic growth, UBS Securities said Thursday in a report.

While full-year guidance last week was weaker than expected, reduced trade tensions lower the risk of results falling short of consensus, UBS said.

The outlook is supported by signs of recovery in key sectors such as automotive and aerospace, along with diminished US recession risk, even as the company continues to face tariff-driven cost pressures and sluggish short-cycle demand, the report said.

UBS lowered its fiscal 2026 earnings outlook to $1 from $1.30 a share and trimmed estimates for 2027 and 2028.

UBS upgraded its rating on Kennametal stock to neutral from sell and raised its price target to $21 from $19.

Price: 21.22, Change: +0.02, Percent Change: +0.09