Deutsche Bank Downgrades Cliffs Natural Resources (CLF) to Hold Post Q4 on Dilution
February 13, 2013 6:57 AM EST
Deutsche Bank downgraded Cliffs Natural Resources (NYSE: CLF) from Buy to Hold with a price target of $38.00 (from $48.00) following Q4 EPS of $0.62 ahead of both DB's of $0.54 and FactSet consensus of $0.51, but EBITDA of $254 million was lower than DB's of $308m on lower iron ore volumes and prices / higher costs.
The firm estimates 19-21% dilution from unexpected share issuance of 27-30m shares.
"Though BS position to improve, we question timing of issuance as 2013 cash flow generation likely to increase and after dividend cut by ~75% to $0.60 (from $2.50). Additionally, BL costs continue to disappoint, and while 2013 SG&A should be down by $60m, capex upped by $75m (to $825m)."