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How Analysts View Cleveland-Cliffs ahead of 2018

Anuradha Garg - Author
By

Nov. 29 2017, Updated 3:15 p.m. ET

Analysts’ recommendations for CLF

The majority of ratings for Cleveland-Cliffs (CLF) are “hold.” According to the consensus compiled by Thomson Reuters, a total of nine analysts cover the stock currently. While 56% of analysts rate it a “hold,” 22% rate it a “buy” and 22% rate it a “sell.”

CLF’s target price implies an upside of 2.7%, compared to its current market price of $6.6.

The chart above shows analysts’ recommendations for Cleveland-Cliffs and its US (DIA)(DOW) steel peers AK Steel (AKS), Nucor Steel (NUE), and U.S. Steel (X).

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KeyCorp reaffirms rating

On November 24, KeyCorp reiterated its “hold” rating for CLF’ stock. The firm’s analyst P. Gibbs, however, boosted Cleveland-Cliffs’s earnings per share estimates for fiscal 2018 from $0.71 to $0.72.

B. Riley sets target price

On November 17, B. Riley set a target price of $10.0 for Cleveland-Cliffs’s stock. The firm has a “buy” rating on the stock. B. Riley FBR analyst Lucas Pipes noted that its firm held a non-deal roadshow for Cleveland-Cliffs. The key points were:

  • the HBI (hot-briquetted iron) project in Toledo
  • the outlook for the Australian iron ore segment
  • CLF’s expectations of steel and iron ore price outlook

On the HBI project, management said it should generate an IRR (internal rate of return) of 20%.

FBR & Co. upgraded Cleveland-Cliffs from “market perform” to “outperform” on April 28, citing favorable risk-reward factors.

JPM’s downgrade

On October 23, J.P. Morgan (JPM) downgraded Cleveland-Cliffs stock from “overweight” to “neutral.” Its target price was also cut from $9.50 to $7.00.

The downgrade from JPM reflected lower estimates for US iron ore’s realized prices in 4Q17, which Cleveland-Cliffs anticipated.

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