Cautious Hold Rating for Cleveland-Cliffs Amid Strategic Expansion and Economic Uncertainties

Analyst Carlos De Alba from Morgan Stanley maintained a Hold rating on Cleveland-Cliffs (CLF – Research Report) and keeping the price target at $7.50.

Carlos De Alba has given his Hold rating due to a combination of factors related to Cleveland-Cliffs’ current financial and strategic position. The company’s recent transformation into the largest integrated steelmaker in North America, following acquisitions of major players like AK Steel and ArcelorMittal USA, is a significant development. However, the acquisition of Stelco has increased the company’s leverage, which, combined with rising macroeconomic uncertainties in the US, justifies a valuation below the historical average.
Carlos De Alba also considers the weakening demand for auto steel into 2025 as a critical factor impacting the company’s outlook. Additionally, the expectation that free cash flow will be directed towards debt reduction rather than shareholder returns further supports the Hold rating. These elements collectively suggest a cautious approach, leading to the Equal-weight rating for Cleveland-Cliffs’ stock.

Based on the recent corporate insider activity of 40 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of CLF in relation to earlier this year.