FBR Capital Upgrades Cliffs Natural Resources (CLF) to Outperform; Multiple Levers to Pull
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Price: $20.81 -0.1%
Rating Summary:
9 Buy, 10 Hold, 10 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Rating Summary:
9 Buy, 10 Hold, 10 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
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FBR Capital is going against the grain Monday and upgrading Cliffs Natural Resources (NYSE: CLF) from Market Perform to Outperform with a price target of $28.00. The upgrade follows extensive meetings with the company's management team.
FBR analyst Mitesh Thakkar came away from the meetings more constructive on the company's ability to withstand weak iron ore prices.
Thakkar believes the company has multiple levers to pull including (a) reducing expenses by curbing spending on chromite; (b) scaling back 2014 capex; (c) reducing operating costs in Canadian business; and (d) monetizing assets to boost liquidity, if needed.
The analyst also believe that Cliffs' U.S. operations are "well positioned to withstand potentially higher domestic supply, and the company has the ability to boost reserves in Australia. Furthermore, we believe recent trends in China (low port inventories, higher domestic prices, and profitability of steel mills) are also supportive of iron ore imports,"
Lastly, with shares down 49% year to date versus a 10% gain for the broader market, the valuation is attractive based on their expectations of a $115/ton iron ore price in 2014.
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 $19.91 yesterday.
FBR analyst Mitesh Thakkar came away from the meetings more constructive on the company's ability to withstand weak iron ore prices.
Thakkar believes the company has multiple levers to pull including (a) reducing expenses by curbing spending on chromite; (b) scaling back 2014 capex; (c) reducing operating costs in Canadian business; and (d) monetizing assets to boost liquidity, if needed.
The analyst also believe that Cliffs' U.S. operations are "well positioned to withstand potentially higher domestic supply, and the company has the ability to boost reserves in Australia. Furthermore, we believe recent trends in China (low port inventories, higher domestic prices, and profitability of steel mills) are also supportive of iron ore imports,"
Lastly, with shares down 49% year to date versus a 10% gain for the broader market, the valuation is attractive based on their expectations of a $115/ton iron ore price in 2014.
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 $19.91 yesterday.
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