Cleveland-Cliffs Inc (NYSE:CLF), a major player in the steel industry, witnessed its stock price rise on Thursday, signifying a rebound after a downturn triggered by a recent analyst downgrade. This movement came after KeyBanc Capital Markets adjusted its stance on the company's shares, fueling renewed market activity.
The downgrade was initiated by Philip Gibbs, an analyst at KeyBanc, who shifted his rating on Cleveland-Cliffs from Overweight to Sector Weight. His rationale centered on the observation that the company’s principal catalysts have largely run their course. Additionally, Cleveland-Cliffs is confronting moderately increased operational expenses attributable to a richer product mix, which impacts overall cost structures.
In discussing valuation, Gibbs conveyed that current stock prices appear to more accurately incorporate anticipated non-core asset disposals along with potential joint venture arrangements with POSCO, South Korea’s most prominent steelmaker. While a partnership with POSCO could provide beneficial financial contributions, the specifics of such a collaboration remain largely undefined at this stage, rendering the prospects somewhat uncertain.
Alongside these considerations, Gibbs also revised down his financial outlook for Cleveland-Cliffs. He now anticipates a fourth-quarter EBITDA showing a loss of $22 million, a significant departure from his earlier expectation of a $63 million profit, primarily influenced by weakening spot steel prices and rising costs. Furthermore, his EBITDA estimate for 2026 was lowered from $1.63 billion to $1.33 billion, underscoring the challenges the company may face over the medium term.
Analyst opinions on Cleveland-Cliffs have shown variability in recent weeks. For instance, Wells Fargo upgraded the stock from Underweight to Equal-Weight on November 14, concurrently raising its price target from $11.00 to $12.00. Conversely, Citi has held a Neutral rating since November 11, with its target price adjusted downward from $12.00 to $11.00.
KeyBanc, despite the recent downgrade, had maintained an Overweight rating as recently as November 10, though it reduced its target price from $15.00 to $13.00 on that date. Meanwhile, Goldman Sachs sustained a Buy rating as of October 31, while increasing its target price from $14.50 to $16.00, reflecting a more favorable estimation of Cleveland-Cliffs’ long-term prospects.
At the time of reporting on Thursday, shares of Cleveland-Cliffs were trading at approximately $12.25, registering an increase of about 1.83%. The price movement indicates a partial recovery following the previous dip associated with the downgrade and demonstrates the market’s responsiveness to evolving analyst insights and company developments.
Overall, Cleveland-Cliffs remains a focal point for investor attention due to fluctuating analyst sentiments, financial forecast modifications, and strategic uncertainties. The company’s performance in a dynamic steel market context is being closely monitored, particularly in relation to cost management, product mix adjustments, and potential joint ventures that could influence future earnings and valuation.