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Investing.com - Wells Fargo initiated coverage on Cleveland-Cliffs (NYSE:CLF) with an Equal Weight rating and a $10.00 price target on Thursday. The stock, currently trading at $10.63, has shown strong momentum with a 13% gain over the past week, according to InvestingPro data.
The investment bank cited a "near-term constructive sheet price view and richer mix" as factors supporting its target price, which uses an 8x 2026E EV/EBITDA multiple.
Wells Fargo noted this valuation represents a higher-than-historical target multiple compared to Cleveland-Cliffs’ trading range of 6-7x over the past 1-3 years, reflecting the company’s "particular operating leverage to sheet prices."
The firm acknowledged management has made "steady progress on cost-cutting and pruning underperforming assets" at the steel and mining company.
Despite these improvements, Wells Fargo expressed skepticism regarding potential asset sales at Cleveland-Cliffs.
In other recent news, Cleveland-Cliffs reported a positive earnings surprise for the second quarter of 2025. The company achieved an earnings per share (EPS) of -0.5, exceeding the forecasted -0.71, and reported revenue of $4.9 billion, surpassing expectations of $4.85 billion. This financial performance has been met with optimism, as reflected in subsequent analyst actions. KeyBanc upgraded Cleveland-Cliffs from Sector Weight to Overweight, highlighting improved cost and efficiency performance. Jefferies raised its price target for the company to $11.00 from $7.25, maintaining a Hold rating, citing stronger-than-expected EBITDA of $97 million. Citi also adjusted its price target from $7.50 to $11.00, retaining a Neutral rating, and projected a third-quarter EBITDA of $200 million based on company guidance. Citi anticipates an annual EBITDA run-rate of approximately $1.2 billion, assuming further cost reductions in the fourth quarter. These developments underscore Cleveland-Cliffs’ operational improvements and financial resilience in recent months.
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