Nomura Securities Reiterates a 'Neutral' on Cliffs Natural Resources (CLF); Lack of Positive Catalysts and Growth Execution Risk

April 26, 2012 10:26 AM EDT
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Price: $9.23 --0%

Rating Summary:
    3 Buy, 12 Hold, 12 Sell

Rating Trend: Up Up

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Nomura Securities reiterates a 'Neutral' on Cliffs Natural Resources (NYSE: CLF) price target of $68.00.

Analyst, Curt Woodworth, said, "We believe high cost inflation in the key U.S. (up 20% YoY in 1Q 12) and Asia Pacific iron ore operations (up 31% YoY) present significant challenges for CLF and the company's ability to monetize recent strength in iron ore prices. Also, continued cost challenges in eastern Canada also serve to reduce profit conversion metrics from higher iron ore prices. We are reducing '12 EPS to $8.60 (from $9.80) and '13 to $9.05 (from $10.50). Valuation is fair at 5.0x 2012E EV/EBITDA; however, its high cost structure for iron ore on the seaborne curve limits multiple expansion potential."

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 $67.11 yesterday.

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