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Cliffs Natural Resources Inc. Message Board

  • durfinvests durfinvests Mar 4, 2013 4:54 PM Flag

    BMO Capital downgraded Cliffs Natural Resources aftermarket!!!!!!!

    BMO Capital downgraded Cliffs Natural Resources (NYSE: CLF) from Outperform to Market Perform.

    Sentiment: Strong Sell

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    • What a stupid call if it's true. They rated outperform when stock price was $35-70 and down grade at $23. Fk' them. I don't thnk the analyst should be fired immdiately.

    • According to BMO Capital Markets:

      Downgrading to Market Perform, Target Price Lowered

      Event

      BMO Research is resuming coverage on CLF following a period of research restriction. Cliffs reported Q4/12 underlying earnings of US$89M, or US$0.62 per share versus BMO Research and consensus forecast of US$0.54 per share, plus an equity issue.

      Impact

      Negative. CLF has issued 9M ordinary shares and 27M depositary shares. Whilst strengthening the balance sheet, shareholders are effectively being asked to pay for the company’s poor performance. CLF sees no improvement to costs at Bloom Lake near term, forecasting cash costs of US$85–90/t in 2013. Capex for 2013 has increased to US$800–850M from US$700–800M previously. Prudently, CLF has significantly reduced the dividend to US$0.15 per quarter.

      Forecasts

      EPS has been reduced 46% to US$1.47 in 2013E and reduced 40% to US$2.70 for 2014E.

      Valuation

      BMO Research’s estimate of Cliffs’ NPV of US$38.75 per share is down 26% on the prior US$52.43.

      Recommendation

      Even acknowledging the shares are at a 52-week low, BMO Research downgrades CLF to Market Perform and reduces its target price to US$27 from US$50, representing 0.7x NPV. This is on expectations of: 1) iron ore prices have peaked and are expected to decline; 2) per share dilution on the unexpected equity issue; 3) failed corporate strategy (coal, Amapa, Bloom Lake, chrome); 4) capex remaining too high; and 5) loss of U.S. iron ore sales contracts. Shareholders should switch to Rio Tinto (RIO-LSE; £33.28; Outperform).

    • tomorrow 15% down

      Sentiment: Strong Sell

 
CLF
16.73Aug 20 4:00 PMEDT

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