Dahlman Rose Lowers Price Target on Cliffs Natural Resources (CLF)

Dahlman Rose & Company is out with a research report this morning, where it reiterates its Buy rating on Cliffs Natural Resources CLF; it lowered its price target on the stock to $80.00, from $85.00. The DR analysts said that the company's recently announced quarterly earnings results were below their expectations due to lower iron ore prices in the company's North American Iron Ore operations. They added that, while iron ore prices during were significantly lower than expected in Q3, they think that once a contract dispute with one of Cliff's largest customers is resolved this metric should improve substantially. As for valuation, the analysts remarked, “We anticipate that the company will generate EPS of $6.84 and $8.80 in 2010 and 2011, respectively, versus our previous estimates of $7.65 and $9.80. From an EBITDA perspective we anticipate that the company will generate $1.6 billion and $2.1 billion in 2010 and 2011, respectively, versus our previous estimate of $1.8 and $2.5 billion. We are decreasing our price target to $80 from $85, based upon our revised EBITDA estimates. We calculate our price target by applying a 5.5x EV/EBITDA multiple to our 2011 EBITDA estimate.”