Credit Suisse Downgrades Kennametal to Neutral from Outperform, $50.00 PT

In a report published Monday, Credit Suisse analyst Julian Mitchell downgraded Kennametal, Inc. KMT from Outperform to Neutral, keeping its $50.00 price target. According to the report, 2014-2015 EPS estimates have been slightly reduced as valuations moves forward. “While management has done a very laudable job in holding margins through the recent short-cycle recession, and has an efficient balance sheet approach, we think these factors are fully embedded in the share price, and are concerned that consensus is expecting too steep a rebound in organic sales growth,” the report said. “In Infrastructure, we forecast a return to growth in the March Q, after 6 consecutive quarters of declines, but again do not see why a sharp snap-back is likely given energy prices and OEM commentary.” The report further asserted that KMT has a relatively efficient balance sheet, unlike many other companies the analysts cover. Now that the ATI tungsten deal has closed, and KMT's leverage ratios are moving back towards peak historic levels, it is believed further major capital deployment moves are unlikely in the near-term. KMT closed Friday at $51.99.