Cleveland-Cliffs' Tariff Optimism Fails to Impress Analysts

Cleveland-Cliffs Inc. (NYSE: CLF) has been making waves with its bullish stance on President Trump's tariff policies, but analysts seem to be taking a more cautious approach. The steel producer recently reported preliminary results for the fourth quarter and full year of 2024, which fell short of expectations. Despite the company's optimism, analysts are not convinced that tariffs will have the desired impact on Cleveland-Cliffs' performance.



In the preliminary results, Cleveland-Cliffs expects steel shipments of 3.8 million net tons in the fourth quarter, with revenues of around $4.30 billion. However, the company anticipates an adjusted EBITDA loss of about $85 million in the quarter. For the full year, steel shipments are expected to reach 15.6 million net tons, with revenues around $19.2 billion and adjusted EBITDA of around $775 million. Including Stelco, the pro-forma adjusted EBITDA for 2024 is expected to be about $1.2 billion.



Lourenco Goncalves, Cliffs' Chairman, President, and CEO, expressed confidence in the manufacturing-friendly items on President Trump's agenda, stating that the company has already seen improvements in its order book. He also praised the President's decision to impose tariffs on Mexico, Canada, and China, expecting further tariff action to come on steel specifically. However, analysts seem to be more skeptical about the long-term impact of tariffs on Cleveland-Cliffs' performance.

Wall Street analysts have a consensus price target of $16.9 for Cleveland-Cliffs stock, implying a potential upside of 69.2% from the current price. This optimism is not shared by all analysts, as some have expressed concerns about the company's ability to capitalize on tariffs. The company's own guidance suggests a more cautious outlook, with adjusted EBITDA expected to be significantly lower than the analysts' price targets and earnings forecasts.



In conclusion, while Cleveland-Cliffs has expressed optimism about the potential benefits of President Trump's tariff policies, analysts seem to be taking a more cautious approach. The company's preliminary results for the fourth quarter and full year of 2024 fell short of expectations, and the company's own guidance suggests a more conservative outlook than the analysts' price targets and earnings forecasts. As the market continues to evolve, investors should closely monitor the situation and consider the various factors that could impact Cleveland-Cliffs' performance in the coming years.