Shares of Cleveland-Cliffs Inc. (CLF) jumped Tuesday after the iron-ore miner was upgraded to buy from hold at GLJ Research thanks to the stock's earnings potential and rising steel prices.
The Cleveland company was given a $22.09 price target. That compares with the stock's Monday closing price of nearly $14. At last check shares of Cleveland-Cliffs jumped 5.4% to $14.74.
The investment firm expects the company to realize strong earnings in the first half of 2021 with momentum for hot-rolled coil prices staying "abnormally strong" well into the summer months.
"After conversing with our government policy contact, we put the probability of President Biden’s $1.9 trillion stimulus bill, which passed the House of Representatives over the weekend, at close to 100% of passing at some point next week," analyst Gordon Johnson said.
Johnson's model counts on channel checks showing "never-ending" stimulus and political opposition to rescinding tariffs.
Last week, Cleveland-Cliffs shares dropped after the company reported adjusted earnings of 14 cents a share, missing analyst estimates of 20 cents per share. Revenue of $2.27 billion also missed estimates of $2.34 billion.
On Dec. 9, the company said it completed the buyout of ArcelorMittal USA, which was renamed Cleveland-Cliffs Steel.
“With the completion of our second transformational acquisition creating the largest flat-rolled steel producer in North America and the startup of the most modern and environmentally friendly direct reduction plant in the world, Cliffs enters 2021 with the right size, the right product mix, and the right customer mix for the business environment in which we operate,” Chief Executive Lourenco Goncalves said in a statement.