UPDATE: Deutsche Bank Downgrades Cliffs Natural Resources to Hold, Reiterates $45 PT

In a report published Monday, Deutsche Bank downgraded its rating on Cliffs Natural Resources CLF from Buy to Hold, but reiterated its $45.00 price target. Deutsche Bank noted, “Cliffs is one of the top iron ore producers in the world. Cliffs is also North America's largest producer of iron ore pellets accounting for ~45% of the region's supply (rest are steel mill-owned) and sells its production mainly to integrated steel companies in the US and Canada. The $5bn Consolidated Thompson's (CLM) acquisition gives Cliffs an avenue for sustained long-term growth as plans call for tripling output to 22m tons by 2016. CLM re-orients Cliffs to the seaborne iron ore market and directs sales to higher-priced Asian market. Additionally, the company's Australia and Brazil-based mines now account for a significant proportion of its capacity and price directly from seaborne benchmarks. Some 58% of its consolidated sales volume is priced based on international seaborne benchmarks and more US iron ore contracts are expected to move towards world pricing. Though coal's turn-around should drive earnings going forward, uneven performance at this business remains a concern. Medium term, chromite may represent a 3rd main business line. Downgrading to Hold (from Buy) on valuation and lack of company-specific near-term catalysts.” Cliffs Natural Resources closed on Friday at $44.45.