Shares of Cliffs Natural Resources (CLF) fell more than 15% to a four-year low on Wednesday and analysts say the selloff is far from over.
The iron-ore miner, whose stock has fallen 51% since January, making it the worst-performing stock in the S&P 500 year-to-date, saw its price target slashed by both Morgan Stanley (MS) and Credit Suisse (CS) on Wednesday.
Credit Suisse cited ongoing restructuring in the company's Great Lakes market that it predicts will weigh on its pricing power and potentially further erode earnings in its decision to axe its target to $10 from $30. Analysts at the investment bank have the company rated at "underperform."
Morgan Stanley cut the Cleveland-based miner to “underweight” from “equal weight,” saying Cliffs Natural's shocking 76% dividend cut to 15 cents from 62.5 cents and "deteriorating operational outlook" have not been fully priced into the market.
"We believe Cliffs’ key US iron ore business will be halved in coming years as new Great Lakes supply cuts into volumes and pricing," Morgan Stanley analyst Evan Kurtz wrote in a note.
Also on Wednesday, Goldman Sachs (GS) raised its outlook on Cliffs Natural to “neutral” from “sell,” however the sunnier outlook failed to stem the flurry of selling.
Shares of Cliffs Natural slumped more than 15.5% in recent trade to $18.10.
While there is optimism in a recovery of iron ore demand and prices, the company has struggled in recent quarters.
In February, Cliffs Natural reported an 11% decline in full-year sales to $5.9 billion, hurt by a sharp decline in seaborne iron ore pricing. It also posted a loss of $6.32 a share, nearly halved from a year-earlier $11.48.