Cliffs Natural (CLF) Post Solid Quarter, But Not Out of the Woods - Nomura

April 26, 2013 11:59 AM EDT
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Price: $9.01 -4.45%

Rating Summary:
    3 Buy, 12 Hold, 12 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 23 | Down: 34 | New: 34
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Nomura Securities is sticking with its Buy rating on Cliffs Natural Resources (NYSE: CLF) following solid Q1 results on Wednesday, but used the report as a opportunity to cut their price target from $37 to $26.

"While we believe iron ore fundamentals should be well supported for 2013, the market will continue to worry about larger surplus markets in 2014 and 2015, in our view," analyst Curt Woodworth stated. "We stand more in the camp that CLF's U.S. iron ore business will remain highly cash generative for the foreseeable future, but do see continued execution risk at Bloom Lake."

He continued, "We believe CLF has solid asset value in the current market environment, but we are lowering our price target to $26 from $37 as we adjust for the dilution from the recent capital raising, and lower our target EV/EBITDA multiple to 6.9x 2014E EV/EBITDA. CLF currently trades at 2014 FCF yield of 4% and 2015 FCF yield 9% (post E.C. capex growth) and 5.0x and 6.8x 2014E and 2015E EV/EBITDA, respectively."

The firm moved FY 2013 EPS estimates from $2.50 to $2.75 and FY 2014 EPS from $0.65 to $1.32.

For an analyst ratings summary and ratings history on Cliffs Natural Resources click here. For more ratings news on Cliffs Natural Resources click here.

Shares of Cliffs Natural Resources closed at $20.95 yesterday.

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