logo
  Join        Login             Stock Quote

Cliffs Natural Resources (CLF) Downgraded To 'Sector Perform' By RBC Capital, PT Lowered

 December 05, 2012 02:48 PM
 


(By Balachander) Cliffs Natural Resources Inc. (NYSE: CLF) shares were downgraded to "Sector Perform" from "Outperform" and price target lowered to $32 from $45 by RBC Capital Markets.

"We lower our rating on the shares because of our more subdued outlook for iron ore in 2013 and 2014, the loss of growth at Bloom Lake, our expectation of further negative guidance revisions at year-end, and a possible dividend cut," RBC wrote in a note.

"We believe much of the bad news is already reflected in the share price," the brokerage said. "However, we expect upside for the shares to be limited over the next 12 months."

[Related -How To Supply Your Portfolio With Outperforming Stocks]

Cliffs announced mid-November that it is curtailing production in U.S. Iron Ore and putting Bloom Lake Phase II on hold. Cliffs is delaying the completion of Phase II until at least early 2014.

RBC said the growth at Bloom Lake was a significant part of its investment thesis.

"With Bloom Lake sales guidance from Phase I lower than the previously stated capacity of 7.2 Mtpa, we believe costs are unlikely to reach the $60–65/tonne level by year-end and will be higher than we were previously expecting in 2013," the brokerage wrote.

Cliffs must draw $450 million from its $1.75 billion revolver in 2013 on top of the $250 million already drawn as of Q3/12 in order to maintain its dividend and a positive cash balance. RBC believes a dividend cut is possible in 2013.

The stock, which has been trading in the 52-week range of $28.05 to $78.85, gained 1.19 percent to trade at $29.75 on Wednesday.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageBuffett's Market Indicator Flashes Red, Prepare To Sell

With each passing month, it's becoming evident that the current bull market has slowed from a gallop to a read on...

article imagePBoC joins other major central banks with unconventional monetary policy action

Softer than expected economic growth in China (see discussion) has finally spurred the PBoC into action. read on...

article imageA Buyback Boost?

Are stock buybacks the only thing keeping this bull market read on...

article imageGold Slides On Perfect Storm For Dollar

For all the anticipation surrounding the delivery of the Fed’s statement in the run-up to the September read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.