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Cleveland-Cliffs: Analysts Weren’t Impressed after Q3

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  • Cleveland-Cliffs reported its third-quarter results on Wednesday. While the stock traded higher in pre-market trading on that day, it eventually closed with a loss.
  • The company’s earnings were better than expected. We’ll discuss how analysts rate the stock after its third-quarter earnings.
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Cleveland-Cliffs stock

Cleveland-Cliffs (CLF) reported its third-quarter earnings on Wednesday. The company generated revenues of $556 million in the third quarter—compared to $742 million in the same quarter in 2018. Cleveland-Cliffs’ adjusted EBITDA also fell from $250 million to $144 million during this period. Notably, seaborne iron ore prices and US steel prices have fallen over the last year. Among steel companies, Nucor (NUE) and Steel Dynamics (STLD) also reported lower earnings in the third quarter. U.S. Steel (X) and AK Steel (AKS) will release their third-quarter earnings next week.

US steel stocks

Cleveland-Cliffs stock lost 5.3% on Wednesday. Although the stock traded higher in pre-market trading on that day, it trimmed the gains and eventually closed in the red. Looking at the YTD (year-to-date) price action, the stock has fallen 4.2%. U.S. Steel has lost 37.6% YTD. AK Steel and Nucor have gained 11.1% and 4.0%, respectively. Despite President Trump’s steel tariffs, US steel stocks have had a dismal run this year. U.S. Steel, AK Steel, and Nucor closed with losses in 2018. Falling US steel prices also had a negative impact on Cleveland-Cliffs.

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Analysts weren’t impressed

Meanwhile, analysts weren’t impressed with Cleveland-Cliffs’ third-quarter earnings. On Thursday, J.P. Morgan lowered its target price from $8 to $7. Credit Suisse also lowered its target price by $1 to $10. Today, Jefferies lowered Cleveland-Cliffs’ target price from $12 to $11.5. Looking at consolidated ratings, two analysts recommended a “strong buy,” five analysts recommended a “buy,” four analysts recommended a “hold,” and one analyst polled by Thomson Reuters recommended a “sell.”

The stock’s mean consensus target price of $8.92 represents a potential upside of 24.7% over its closing price on Thursday. Notably, during the third-quarter earnings call, Cleveland-Cliffs sounded optimistic that US steel prices have bottomed out. Nucor also echoed similar views during its third-quarter earnings call. Read US Steel Companies Call a Bottom after Prices Plummet to learn more.

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