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What Are Analysts Recommending for Cliffs Natural Resources?

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Analyst sentiment

Analysts’ recommendations and ratings are one of the most important market sentiment indicators for investors to look at. Analyst ratings tell you how bullish or bearish analysts are on a particular company or industry.

At the extreme, the sentiment could be an indicator of a change in direction going forward. Generally, when everyone is bearish and dumping stocks, it could mean a bottom and better times ahead, and vice versa.

The above graph shows analysts’ recommendations for Cliffs Natural Resources (CLF) along with its US (VTI) (QQQ) steel peers such as United States Steel (X) and AK Steel (AKS).

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Recent analysts’ actions

Cliffs Natural Resources had no “buy” ratings until the end of May 2016. Now it has two. Of the nine analysts covering the company, five have given it a “hold” recommendation, and two have recommended a “sell.”

The average target price for CLF is $6.30 compared to its current market price of $6.30. The target price still implies an upside potential of 11%.

Macquarie has the highest target price for Cliffs at $10. Axiom Capital has the lowest target price of $2 for the stock.

On August 29, 2016, Macquarie slightly reduced its target price for Cliffs from $11 to $10 while maintaining its “outperform” rating. It reduced the target price due to the share price dilution following the company’s recent equity issuance. However, it remains bullish on the company’s prospects in the medium to long term.

What’s driving sentiment?

The outlook is better now since US steel prices have started to gain traction due to strong demand and lower imports from high penalties. Overall, analysts have started turning positive on these fundamentals, which are in turn driving Cliffs Natural Resources stock. Cliffs’s announcement of a direct reduced iron facility could be the next big positive catalyst for the company.

In the next part, we’ll see what’s driving Cliffs Natural Resources’ revenue and earnings estimates.

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