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Investing.com - Citi raised its price target on Cleveland-Cliffs (NYSE:CLF) to $11.00 from $7.50 while maintaining a Neutral rating following the company’s improved second-quarter 2025 results. The stock, currently trading at $10.66 with a market capitalization of $5.25 billion, has shown strong momentum over the past three months according to InvestingPro data.
The investment bank set third-quarter EBITDA expectations at $200 million based on guidance provided by Cleveland-Cliffs. Citi projects run-rate annual EBITDA of approximately $1.2 billion, assuming additional cost reductions in the fourth quarter. InvestingPro analysis reveals the company operates with a significant debt burden of $7.6 billion, though its current ratio of 2.13 indicates sufficient liquidity to meet short-term obligations.
The firm anticipates EBITDA improving to roughly $1.7 billion in 2026 once the Calvert slab contract concludes. Citi estimates mid-cycle free cash flow break-even EBITDA at approximately $1.8 billion, assuming $1.0 billion in capital expenditures, $0.6 billion in interest, and $0.2 billion in pension costs.
Near-term break-even EBITDA could be $0.4 billion lower with capital expenditures at $0.6 billion, according to the analysis. Citi noted that Cleveland-Cliffs continues to explore non-core asset sales and has raised the possibility of monetizing core assets.
Despite the price target increase, Citi maintained its Neutral stance on Cleveland-Cliffs stock, reflecting a cautious outlook on the steel producer’s near-term prospects. With a beta of 1.91 and rapidly declining free cash flow, InvestingPro subscribers have access to 12 additional key insights and a comprehensive Pro Research Report that provides deeper analysis of the company’s financial health and market position.
In other recent news, Cleveland-Cliffs Inc. reported a positive earnings surprise for Q2 2025. The company announced an earnings per share (EPS) of -0.5, surpassing the forecasted -0.71, and revenue of 4.9 billion dollars, exceeding the anticipated 4.85 billion dollars. This performance reflects improved operational efficiency and successful cost management, as adjusted EBITDA increased by 271 million dollars from the previous quarter. Cleveland-Cliffs achieved record shipments of 4.3 million tons, a 150,000-ton increase from the previous quarter, which contributed to the positive earnings.
The company remains focused on cost reduction and operational efficiency, with plans to potentially sell non-core assets to accelerate debt reduction. Additionally, Cleveland-Cliffs has engaged JPMorgan to explore the sale of certain non-core operating assets. These recent developments indicate a cautious yet optimistic outlook for the remainder of the year. The company’s strategic priorities include operational discipline, capital prudence, and free cash flow generation, as emphasized by CEO Lorenzo Consolfez and CFO Celso. Despite ongoing financial challenges, Cleveland-Cliffs continues to focus on its financial stability and growth strategies.
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