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CLF

Cleveland-Cliffs

$7.12

-0.32 (-4.30%)

, VALE

Vale

$10.34

0.01 (0.10%)

15:21
10/20/17
10/20
15:21
10/20/17
15:21

Cleveland-Cliffs drops after seeing 'softer Q4' amid volume cuts, higher costs

Shares of iron ore miner Cleveland-Cliffs (CLF) are falling after reporting third quarter earnings per share of 18c, widely missing analyst expectations of 32c per share. Q3 EPS included an $89M, or 29c per diluted share, loss on extinguishment of debt, and a $32M, or 11c per diluted share, gain from discontinued operations. This compares to a net loss of $28M, or 12c per diluted share, recorded in Q316. The iron ore miner reported consolidated revenues of $698M, an increase of 26% compared to the prior year's third-quarter revenues of $553M. Analysts were expecting quarterly revenue of $671.94M. Cost of goods sold for the quarter increased by 15% to $538M compared to $468M reported in the Q316. CEO COMMENTARY: Cleveland-Cliffs CEO Lourenco Goncalves said, "We are very pleased with our accomplishments so far this year, in which we became a much more profitable company, substantially improved our debt profile and now pay a lot less in interest expense. With the third quarter numbers in the books, we have already outperformed in three quarters of 2017 the results of the entire 2016." Mr. Goncalves added, "On top of that, during the third quarter, we acquired the remaining 15% of the Tilden Mine, and now own 100% of all active and idled iron ore mining assets in the State of Michigan. The acquisition will allow us to become a 20 million long ton pellet supplier in 2018." CUTS OUTLOOK: The company reduced its FY17 production and volume expectations by 500,000 tons to 18.5M long tons. The reduction in sales volumes is attributable to a significant reduction in pellet nomination by a large customer, partially offset by increased export sales. Additionally, Cliffs' full-year 2017 Asia Pacific Iron Ore sales and production volume expectations were each reduced by 500,000 metric tons, to 10.5M metric tons of sales and 11 M metric tons of production. The reductions were driven by operational decisions reflecting current market conditions and quality ore availability. For 2018, Cliffs expects Asia Pacific Iron Ore sales and production volumes of 11M tons. Due to unfavorable exchange rate movements and lower production volumes, Cliffs' full-year 2017 cash cost of goods sold and operating expense expectation has been increased to $36 -$41 per metric ton. This assumes a full-year average exchange rate of 77c U.S. Dollar to Australian Dollar. CONFERENCE CALL COMMENTS: A distinct highlight of Q3 was the adjusted EBITDA of $154M, a 149% increase over the prior-year quarter. "Through nine months of this year, we've already generated more EBITDA than we did in all 4 quarters for 2016 and 2015," said Lourenco Goncalves, the company's CEO, speaking on the company's Q3 earnings call. Goncalves pointed out that production costs have been rising and guided toward costs per long ton towards the high-end of the $55 to $60 guidance range on a full year basis. SEES Q4 LOWER: Citing cost impacts from higher profit sharing based on its workforce, higher energy rates and higher maintenance costs, along with an unexpected downward revision from a key customer, the company sees a softer fourth quarter than anticipated. "However, these short-term negative impact should last only one quarter. Next year sales forecasts remains intact, and the first half of 2018 should be a strong one," added the CEO during the company conference call. PRICE ACTION: Shares of Cleveland-Cliffs are down 4.3% to $712 per share in late-day trading. OTHERS TO WATCH: Other names in the iron ore space include Vale (VALE) and BHP (BHP).

CLF

Cleveland-Cliffs

$7.12

-0.32 (-4.30%)

VALE

Vale

$10.34

0.01 (0.10%)

BHP

BHP Billiton

$41.26

-0.305 (-0.73%)

  • 20

    Oct

CLF Cleveland-Cliffs
$7.12

-0.32 (-4.30%)

03/27/17
JPMS
03/27/17
NO CHANGE
Target $13
JPMS
Overweight
JPMorgan ups Cliffs target to $13 on higher iron ore prices
JPMorgan analyst Michael Gambardella raised his price target for Cliffs Natural Resources to $13 from $12 citing his firm's higher iron ore price forecasts. Chinese steel demand has proven to be more resilient, Gambardella tells investors in a research note. The analyst keeps an Overweight rating on Cliffs.
09/25/17
MSCO
09/25/17
NO CHANGE
MSCO
Morgan Stanley raising price targets on Metals & Mining stocks
Morgan Stanley analyst Piyush Sood is "more constructive" in his outlook for base metals and met coal stocks and raised his price targets on Alcoa (AA) to $54 from $47, Freeport-McMoRan (FCX) to $10 from $8, Teck Resources (TECK) to $20 from $17, Newmont Mining (NEM) to $33 from $31, and Warrior Met Coal (HCC) to $22 from $17. Sood added that Alcoa remains his top pick. However, Sood lowered the price target of Cleveland-Cliffs (CLF) to $7 from $8.
07/31/17
AXIO
07/31/17
NO CHANGE
AXIO
Sell
Axiom says 'now is the time' to short U.S. Steel, maintains Sell rating
Axiom analyst Gordon Johnson II believes "now is the time" to short U.S. Steel (X) and Cliffs Natural (CLF) shares and to go underweight the U.S. steel sector, as he sees an increasing likelihood of an indefinite delay in the US Commerce Department's 232 steel tariff decision. He also thinks the contribution to China's GDP growth from commodity-intensive sectors may have peaked, he tells investors. The analyst keeps a Sell rating on U.S. Steel shares.
04/28/17
04/28/17
UPGRADE

Outperform
Cliffs Natural upgraded to Outperform from Market Perform at FBR Capital
VALE Vale
$10.34

0.01 (0.10%)

03/31/17
BMOC
03/31/17
UPGRADE
BMOC
Market Perform
Vale upgraded on higher iron ore price outlook at BMO Capital
As noted earlier, BMO Capital upgraded Vale to Market Perform from Underperform. Analyst Edward Sterck upgraded the stock based on an increase in his iron ore price outlook. Target to $10 from $7.
09/12/17
SANT
09/12/17
UPGRADE
SANT
Buy
Vale upgraded to Buy from Hold at Santander
05/31/17
HSBC
05/31/17
UPGRADE
Target $10.5
HSBC
Buy
Vale upgraded to Buy from Hold at HSBC
HSBC analyst Jonathan Brandt upgraded Vale to Buy and raised his price target for the shares to $10.50 from $10. The recent decline in iron ore prices has mitigated risk, and the focus should now shift to the company's "strong" free cash flow generation and 6% dividend yield, Brandt tells investors in a research note.
05/31/17
05/31/17
UPGRADE

On The Fly: Top five analyst upgrades
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. Donaldson (DCI) upgraded to Buy from Hold at Jefferies with analyst Laurence Alexander saying he sees "increasing evidence" the company's end-markets are exiting the multi-year trough and believes operating leverage should translate into above-average compound growth over the next few years. He recommends building positions in the stock during the second half of 2017. 2. VMware (VMW) upgraded to Outperform from Neutral at Baird with analyst Jason Noland citing the company's strategic shift to partner with firms rather than compete with the public cloud. 3. Akari Therapeutics (AKTX) upgraded to Neutral from Sell at Chardan. 4. Vale (VALE) upgraded to Buy from Hold at HSBC with analyst Jonathan Brandt saying the recent decline in iron ore prices has mitigated risk, and the focus should now shift to the company's "strong" free cash flow generation and 6% dividend yield. 5. Potbelly (PBPB) upgraded to Buy from Hold at Maxim with analyst Stephen Anderson citing news that Chief Executive Officer Aylwin Lewis is resigning, as he believes new management could reinvigorate performance. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
BHP BHP Billiton
$41.26

-0.305 (-0.73%)

08/31/17
08/31/17
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. BHP Billiton (BHP) downgraded to Underperform from Sector Perform at RBC Capital with analyst Tyler Broda saying that the company's "mature asset base, especially in petroleum, creates medium term pressure on profitability." 2. New Senior Investment (SNR) downgraded to Neutral from Buy at Compass Point. 3. Calpine (CPN) downgraded to Neutral from Outperform at Macquarie. 4. Ctrip.com (CTRP) downgraded to Outperform from Buy at Daiwa with analyst John Choi saying he expects downward Street earnings revisions following results while the uncertainty on cross-sale revenue in the second half will likely cap the stock's performance in the coming 1-2 quarters. 5. Carrefour (CRRFY) downgraded to Neutral from Overweight at JPMorgan with analyst Borja Olcese saying the company "severely missed expectations" in its first half and profit warned for the year. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
09/06/17
EXAN
09/06/17
DOWNGRADE
EXAN
Underperform
BHP Billiton downgraded to Underperform from Neutral at Exane BNP Paribas
09/06/17
09/06/17
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. HP Enterprise (HPE) downgraded to Underperform from Neutral at BofA/Merrill with analyst Wamsi Mohan citing fiscal 2018 headwinds that include increased investment, a competitive pricing environment, and higher commodity costs. 2. Marathon Petroleum (MPC) downgraded to Market Perform from Outperform at Wells Fargo with analyst Roger Read saying he now expects the incentive distribution rights buyout may be at the lower end of the prior 15-20 times range. 3. Verifone (PAY) downgraded to Neutral from Buy at Northcoast with analyst Keith Housum saying he has reduced confidence in the company's ability to grow revenues and increase profitability given the delay in reaching the point of sale market with its new Carbon and Engage platform compared to initial expectations. 4. Mallinckrodt (MNK) downgraded to Equal Weight from Overweight at Morgan Stanley with analyst David Risinger saying he believes yesterday's unfavorable district court ruling in Mallinckrodt's suit against Praxair (PX) has increased the risk of an Inomax generic potentially as soon as October 2018, compared to his prior expectation of 2031. 5. BHP Billiton (BHP) downgraded to Underperform from Neutral at Exane BNP Paribas. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
08/31/17
RBCM
08/31/17
DOWNGRADE
RBCM
Underperform
BHP Billiton downgraded on profitability pressures, valuation, at RBC Capital
As noted earlier, RBC Capital downgraded BHP Billiton to Underperform from Sector Perform. Analyst Tyler Broda says that the company's "mature asset base, especially in petroleum, creates medium term pressure on profitability." He also cited valuation as a reason for the downgrade, saying that the stock "should not trade at a premium to peers."

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, T

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UQM Technologies

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