On Friday, Seaport Global Securities updated its investment rating for Cleveland-Cliffs (NYSE:CLF), shifting the recommendation from Buy to Neutral. This adjustment is driven primarily by the stock’s current trading price of $14.34, which exceeds Seaport’s fair value price target of $13, reflecting a valuation above intrinsic worth per their assessment.
The research house acknowledges that Cleveland-Cliffs is entering 2026 with considerably improved fundamentals compared to the previous year. Enhanced market dynamics along with an optimized operating framework have positioned the steel producer favorably as the new year begins. These positive trends are anticipated to be a focal point during Cleveland-Cliffs’ upcoming earnings call scheduled for February 9, 2026.
Despite these advancements, InvestingPro’s metrics signal ongoing concerns regarding the company’s financial stability. Specifically, Cleveland-Cliffs maintains a weak overall financial health score of 1.62 amid a substantial debt load totaling $8.06 billion. This elevated leverage remains a critical factor in the company’s risk profile.
Seaport Global highlights that, notwithstanding the fundamental improvements, current CLF shares appear to already reflect normalized earnings estimated at about $150 per ton, priced at roughly six times those earnings based on projected year-end 2026 balance sheets. This stands in contrast with the firm’s recent financial results, which show a diluted earnings per share (EPS) of negative $3.40 over the trailing twelve months. Analyst expectations further predict continued losses for the fiscal year 2025, with an EPS forecast of negative $1.93.
Potential upside catalysts identified by Seaport include a prospective partnership with POSCO, a major South Korean steel manufacturer. This alliance could potentially facilitate Cleveland-Cliffs’ debt reduction efforts, while also contributing to volume expansion and reduced unit fixed costs. The company's forthcoming earnings call is expected to provide an update on this partnership, especially if the agreement has not been finalized prior to that date.
Improved deleveraging would be a critical development given the high debt-to-equity ratio of 1.47 recorded by InvestingPro metrics. However, the firm also flags several risks that may weigh on the stock’s performance. These include a possible negative turn in the steel market cycle, increased short-selling activity linked to the announcement of the POSCO collaboration, and the prospect of equity issuance depending on net leverage following any partnership execution. Investor vigilance is warranted, particularly given the company’s significant negative free cash flow of $1.55 billion and elevated stock price volatility with a beta of 1.92.
Beyond the analyst rating changes, Cleveland-Cliffs has recently been involved in several notable corporate developments. The memorandum of understanding with POSCO triggered a Morgan Stanley upgrade from Equalweight to Overweight and lifted the price target to $17, signaling optimistic outlooks from certain market participants. Conversely, KeyBanc lowered Cleveland-Cliffs’ rating from Overweight to Sector Weight over concerns about valuation exceeding their prior $13 price target. Additionally, S&P Global Ratings downgraded the company’s credit rating to 'B+', citing high indebtedness and a declining debt-to-EBITDA ratio primarily influenced by the Stelco acquisition and challenging market conditions.
In governance updates, Cleveland-Cliffs appointed Edilson Camara, ex-CEO of Egon Zehnder, to its Board of Directors. Camara will contribute his expertise as a member of the Compensation and Organization Committee. Furthermore, KeyBanc adjusted its price target downward from $15 to $13, attributing the revision to an approximate 15% dilution effect resulting from a recent secondary stock offering.
These events collectively offer investors a detailed perspective on the operational and strategic positioning of Cleveland-Cliffs as it navigates continuing market pressure and leverages strategic partnerships to enhance financial stability.