Cleveland-Cliffs Lowered in Rating as Analyst Sees Limited Further Upside

KeyBanc Analyst Revises Cleveland-Cliffs Rating

Philip Gibbs, an analyst at KeyBanc Capital Markets, has shifted his outlook on Cleveland-Cliffs Inc (NYSE: CLF), moving the stock from an Overweight rating to Sector Weight.

According to Gibbs, Cleveland-Cliffs has already realized its most significant growth drivers, and the company is now contending with slightly increased expenses due to a shift toward higher-value products.

Updated Outlook for Cleveland-Cliffs

Gibbs noted that the current valuation of the Cleveland-based steelmaker now more accurately factors in upcoming sales of non-core assets and new strategic partnerships with POSCO, South Korea’s largest steel producer. These moves are intended to help streamline the company’s finances and reduce debt.

There is potential for Cleveland-Cliffs to reach a beneficial agreement with POSCO, but details remain unclear at this time.

Revised Financial Projections

• The analyst has adjusted the company’s fourth-quarter EBITDA forecast, now expecting a loss of $22 million rather than the previously anticipated $63 million profit. This change is attributed to delayed spot pricing and marginally higher costs.
• Looking ahead to 2026, the EBITDA estimate has been lowered to $1.33 billion from $1.63 billion. This revision mainly reflects increased steel unit costs and a shift toward a greater proportion of automotive and finished steel shipments, which will offset the expiration of Cleveland-Cliffs’ approximately 1.5 million ton per year slab contract with ArcelorMittal SA (NYSE: MT) at the end of 2025.

Stock Performance

At the time of the report’s release on Wednesday, Cleveland-Cliffs shares had fallen by 6.78%, trading at $12.36.

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