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Bank of America Downgrades Cliffs Natural Resources to “Neutral”; Target Also Slashed on Cautious Iron Ore Stance (CLF)

By Dividend.com,  May 31, 2012, 08:57:21 AM EDT

Iron ore and coal mining giant Cliffs Natural Resources Inc ( CLF ) on Thursday caught a big downgrade from analysts at Bank of America.

The firm said it cut its rating on CLF from "Buy" to "Neutral" and lowered its price target from $84 all the way down to $60. That new target still suggests an 18% upside to the stock's Wednesday closing price of $50.88.

A Bank of America analyst commented, "We downgrade CLF to Neutral from Buy as we contemplate a more cautious outlook on iron ore. While much of potential excess supply and more modest demand seem priced into shares, we see limited upside amid likely further iron ore pressure. We are confident in CLF's ability to lower costs and add capacity but a weaker iron ore price trumps these accomplishments in our view. Sustained cash flow strength and a 5% dividend yield rest on a certain iron ore price, which may be at risk. Our new estimates use the forward curve at $120/t for 2013E iron ore vs a prior $140/t. We assume Chinese and global steel demand growth ~5%."

Cliffs Natural Resources shares fell 78 cents, or -1.5%, in premarket trading Thursday.

The Bottom Line
Shares of Cliffs Natural Resources ( CLF ) have a 4.91% dividend yield, based on last night's closing stock price of $50.88. The stock has technical support in the $44-$45 price area. If the shares can firm up, we see overhead resistance around the $55-$57 price levels.

Cliffs Natural Resources Inc ( CLF ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Stocks

Referenced Stocks: CLF



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