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Is Cliffs Natural Resources' Turnaround Going to Last?

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Part 10
Is Cliffs Natural Resources' Turnaround Going to Last? PART 10 OF 11

Cliffs: Understanding Analyst Recommendations

Analysts’ recommendations

Cliffs Natural Resources (CLF) has “buy” recommendations from 22% of analysts covering the stock and “sell” recommendations from another 22% of these analysts. About 56% of analysts recommend a “hold.” The target price implies an upside of 4% at the current market price of $8.11.

Cliffs: Understanding Analyst Recommendations

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The chart above shows analysts’ recommendations for Cliffs Natural Resources and US (VTI)(QQQ) steel peers U.S. Steel (X), AK Steel (AKS), and Nucor Steel (NUE).

Analysts are upbeat about Cliffs Natural Resources

Credit Suisse (CS) has raised its outlook for iron ore. It raised Cliffs Natural Resources’s (CLF) target price from $2 to $8 on March 3, 2017. However, it’s still not very positive on Cliffs Natural Resources stock with its “underperform” rating.

FBR raised Cliffs Natural Resources’s target price from $10 to $11 after the company’s solid 4Q16 earnings beat and a stronger outlook for 2017. It also views the company’s equity offer positively. FBR analyst Lucas Pipes commented on the offer, “We view the company’s decision to proactively address 2020 maturities positively, especially on the recent strength in iron ore prices.”

Axiom’s opposing view

While many analysts have turned positive on steel stocks (SLX) amid expectations of rising protectionism under Trump’s administration, not all of them share in this optimism.

As reported by Barron’s blog, Axiom Capital’s Gordon Johnson, mentioned, “As we have stated previously, we feel President Trump’s administration will likely resort to countervailing duties/tariffs to penalize the countries it deems are cheating (not 201/301 actions). However, given roughly 88 countries import steel into the US, we question how effective this approach will prove as many countries will simply re-route steel to the countries who can ship into the US, ultimately allowing the steel to find its way to our shores.”

The firm has a “sell” rating on Cliffs Natural Resources with a target price of $2.

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