UPDATE: JP Morgan Upgrades Cliffs Natural Resources to Overweight on Discount to Peer Index

JP Morgan upgraded Cliffs Natural Resources

from Neutral to Overweight and raised the price target from $35.00 to $40.00. JP Morgan commented, "Since mid-September 2012, Cliffs' peer group is up 17% on average while CLF is down 37% despite a 53% rise in seaborne spot iron ore prices – the current discount between Cliffs' stock price and iron ore prices is now at the widest spread on record. We attribute this substantial relative underperformance to persistent disappointments at Bloom Lake presented to the market piecemeal over the last two years, ultimately culminating in a 20% write-down on the initial $5B purchase price, a threefold increase in Phase II capex, and a 76% dividend cut. … In our view, Cliffs' shares reflect this series of negative events and are only pricing in $110/tonne iron ore in 2015, 29% lower than current spot prices, based on the stock's average EV/EBITDA multiple of 5.6x Cliffs Natural Resources closed at $28.85 on Friday.