Yahoo Finance Are Analysts More Positive about Cliffs after Its 1Q16 Earnings?
Cliffs Natural Resources' Q1 Earnings: a Turnaround?
Analysts’ recommendations
Even after the company’s recent resilience, the market is still bearish on Cliffs Natural Resources (CLF). Of the 12 analysts covering the company, eight have given it a “hold” recommendation and four have given it a “sell” recommendation. The stock has received no “buy” recommendations. The average target price for CLF is $2.57, which implies a potential downside of 52% from its current market price. Cowen has the highest target price on Cliffs, at $6, while Credit Suisse (CS) and Clarkson Securities have given the stock its lowest target price of $1.
In comparison, Nucor Corporation (NUE) and Steel Dynamics (STLD) have received 41% and 88% “buy” recommendations, respectively. U.S. Steel Corporation (X) and AK Steel Holding Corporation (AKS) have received 12% and 13% “buy” recommendations and 47% and 63% “sell” recommendations, respectively.
Investors can also consider the Materials Select Sector SPDR ETF (XLB) to get diversified exposure to the materials sector. Nucor forms 2.8% of XLB’s portfolio.
Analysts’ reaction
After its 1Q16 results, Cowen and Company doubled its target price for Cliffs Natural Resources from $3 to $6. According to the analyst, Cliffs is well positioned to take advantage of the rapidly improving US steel market. Cowen is also impressed by Cliffs’s management’s efforts to turn the company around. But it remains concerned about Cliffs’s heavy debt. The broker maintained its “market perform” rating on the stock.
FBR Capital Markets also reiterated its “market perform” rating on Cliffs’s stock while maintaining its target price of $1 on April 28.
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