UPDATE: Credit Suisse Downgrades Cliffs Natural Resources to Neutral
Credit Suisse lowers its rating on Cliffs Natural Resources (NYSE: CLF) to Neutral from Outperform and lowers its price target to $82 from $93 as 2011 results confirm challenging environment and 2012 guidance disappoints.
Credit Suisse says, "CLF suggests that its 2012 guidance should generate around US$1.9bn in operating cash flow. Prior to the announcement IBES EBITDA was US$3.4bn, and we were at US$3.5bn. We are a little more bullish than CLF on 2012 commodity prices, US steel prices, and US steel industry utilisation levels all of which translate to better realised pricing and our EBITDA is now US$2.5bn. That said, the biggest driver behind our EBITDA downgrade is pricing related, and this announcement has served to highlight the 'black box' nature of CLF's off-take contracts (particularly in the US), lack of VIU premium, and the extreme leverage that a high cost business has to underlying commodity prices."
CLF closed at $75.82 a share yesterday.
