CLF: Tariff Policy And Mixed Street Views Will Shape Future Returns

Analysts have trimmed the average price target for Cleveland-Cliffs by about $2.40, reflecting a mix of recent target cuts from several firms and a smaller upward revision from Goldman Sachs. These changes have contributed to more cautious assumptions on margins and valuation multiples, even as revenue growth expectations have remained steady to slightly higher.

Analyst Commentary

Recent research shows a split view on Cleveland-Cliffs, with several firms trimming price targets and a smaller number lifting or initiating them at more neutral levels. For you as an investor, the key debate centers on how much to pay for the company relative to its execution risks and earnings power.

Bullish Takeaways

Bullish analysts who raised or maintained targets, including at Goldman Sachs and Citi, signal that they still see support for current valuation levels, even after factoring in recent sector headwinds.
The modest target increases from some firms suggest there is room for upside if management continues to execute on operational plans and if revenue holds near current expectations.
Neutral initiations at large firms such as Goldman Sachs indicate that, while not outright bullish, some on the Street view the current risk and reward as reasonably balanced rather than skewed to the downside.
The relatively small target cut of 10 cents by GLJ Research points to incremental caution rather than a sharp reset of expectations, which can be read as a sign that core assumptions on earnings power have not radically changed.

Bearish Takeaways

Bearish analysts cutting price targets by between about US$2 and US$4.80 are effectively marking down what they are willing to pay for the company, reflecting lower conviction around margins, cash generation or both.
Target reductions at larger firms such as JPMorgan highlight concerns that execution risks, including cost control and pricing power, could cap upside and justify more conservative valuation multiples.
Some research also points to insider selling, such as the CEO stock sale highlighted by GLJ Research, which can feed into a more cautious stance on governance signals and alignment with shareholders.
Overall, the cluster of target cuts across multiple banks reinforces the idea that many bearish analysts see limited room for multiple expansion without clearer evidence of sustained earnings strength.

What's in the News

Reports indicate the Trump administration may impose a 25% tariff on steel and aluminum imports, which directly affects U.S. producers such as Cleveland-Cliffs that compete with imported metal (WSJ).
The White House has indicated there will not be changes to existing tariffs on steel and aluminum unless President Trump personally announces them, and reiterated a focus on supporting domestic steel and aluminum production, including companies like Cleveland-Cliffs (Reuters).
Separate reporting suggests President Trump is reviewing the current tariff structure and may reduce some tariffs on specific steel and aluminum products, with Cleveland-Cliffs listed among the public companies potentially affected by any exemptions or adjustments (Financial Times).
Cleveland-Cliffs reported that from October 1, 2025 to December 31, 2025, it repurchased 0 shares for US$0, and that it has completed repurchases of 7,507,249 shares, or 1.58%, for a total of US$124.22m under the buyback announced on April 22, 2024.

Valuation Changes

Fair Value: updated estimate moved from $13.08 to $10.67, indicating a lower implied valuation level.
Discount Rate: adjusted slightly from 12.33% to 12.04%, suggesting only a small change in the required return used in the model.
Revenue Growth: modelled revenue growth rate shifted from 4.82% to 5.32%, implying a modestly higher top line assumption.
Net Profit Margin: projected profit margin was reduced from 19.05% to 2.75%, a very large cut to expected profitability.
Future P/E: assumed future P/E multiple increased from 3.17x to 17.26x, reflecting a much higher valuation multiple applied to future earnings.

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Key Takeaways

Strong domestic demand, tariff protection, and OEM reshoring drive higher sales volume, pricing power, and improved profit margins for Cleveland-Cliffs.
Cost reductions, asset sales, and investments in specialty steels enhance financial resilience, market expansion, and support structurally higher earnings.
Reliance on protectionist steel tariffs, legacy blast furnace technology, and high automotive exposure pose structural risks to competitiveness, profitability, and market relevance as industry trends evolve.

Catalysts

About Cleveland-Cliffs

Operates as a flat-rolled steel producer in the United States, Canada, and internationally.What are the underlying business or industry changes driving this perspective?

Sustained enforcement and recent increases of U.S. steel tariffs have materially reduced imports, driving higher domestic demand and pricing power for Cleveland-Cliffs. This, along with reshoring in automotive and appliances, positions the company to benefit from greater sales volumes and improved revenue visibility as protectionist trade policy endures.
OEMs are shifting automotive manufacturing capacity and supply chains back to the United States, accelerating orders for domestically produced steel. Cleveland-Cliffs' underutilized automotive steel capacity and established OEM relationships enable rapid volume ramp-up, directly supporting potential EBITDA growth and net margin expansion as demand recovers.
Strategic footprint optimization, internal coke and feedstock integration, and direct moves to lower fixed costs and SG&A have already resulted in unit cost reductions. Ongoing initiatives are expected to deliver further cost savings, driving enhanced free cash flow, lower leverage, and a structurally higher earnings profile through improved operating margins.
Asset sales and ongoing working capital reductions are set to accelerate deleveraging and unlock latent value. Proceeds from noncore divestitures provide additional flexibility for debt paydown, lowering interest costs and improving both net margins and financial resilience.
New investments in higher-margin stainless and specialty steels, buoyed by infrastructure investment, electrification, and clean-energy buildout, will expand Cleveland-Cliffs' addressable markets and support lasting product mix improvement, increasing revenue growth and supporting higher average selling prices.

Cleveland-Cliffs Earnings and Revenue Growth

Cleveland-Cliffs Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Cleveland-Cliffs's revenue will grow by 5.3% annually over the next 3 years.
Analysts assume that profit margins will increase from -6.4% today to 2.7% in 3 years time.
Analysts expect earnings to reach $606.6 million (and earnings per share of $0.56) by about May 2029, up from -$1.2 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $764.8 million in earnings, and the most bearish expecting $214.1 million.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 17.3x on those 2029 earnings, up from -5.0x today. This future PE is lower than the current PE for the US Metals and Mining industry at 22.2x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.04%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

Cleveland-Cliffs' long-term competitiveness and cost structure remain heavily dependent on the continued enforcement of Section 232 steel tariffs; any softening, exemptions, or eventual removal of these protectionist trade measures could re-expose the company to global overcapacity and price competition, negatively impacting revenue and net margins.
The company's integrated blast furnace footprint relies on coal, coke, and natural gas, with management confirming the absence of near-term hydrogen-based decarbonization projects; persisting with legacy steelmaking technologies exposes Cliffs to escalating regulatory costs and customer pressures stemming from global decarbonization trends, leading to higher capex requirements and possible demand risks as automotive and industrial clients seek greener alternatives.
Elevated leverage from recent acquisitions is only partially offset by targeted asset sales; if working capital releases and noncore divestitures fall short or market conditions deteriorate, Cleveland-Cliffs' ability to rapidly deleverage and reduce interest burden may be constrained, increasing earnings volatility and risk to free cash flow.
The company faces significant exposure to automotive OEMs, with recovery in volumes and capacity utilization tied to U.S. auto production; any structural shift toward lighter, alternative materials, slow EV adoption rates, or persistent consumer financing challenges could erode steel intensity in vehicles and pressure Cleveland-Cliffs' long-term revenue base and pricing power.
The ongoing shift in the North American steel market towards electric arc furnace (EAF) mini-mills and increased reliance on scrap-based steel threatens Cliffs' market share and profit margins in the long term, as its existing blast furnace operations may become less cost-competitive and require substantial reinvestment to remain relevant in a decarbonizing industry.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $10.67 for Cleveland-Cliffs based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $15.0, and the most bearish reporting a price target of just $8.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $22.1 billion, earnings will come to $606.6 million, and it would be trading on a PE ratio of 17.3x, assuming you use a discount rate of 12.0%.
Given the current share price of $10.51, the analyst price target of $10.67 is 1.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

CLF: Tariff Pressures And New Auto Contracts Will Shape Fair Value Outlook