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posted on Mar 16, 2010 06:07PM

http://www.forbes.com/2010/03/16/cliffs-natural-resources-markets-equities-mining-coal.html?boxes=marketschannelnews

U.S. Equities

Cliffs Natural Resources Climbs With Analyst Support

Melanie Lindner, 03.16.10, 05:30 PM EDT

Mining firm rises on upgrades from JPMorgan Chase, Deutsche Bank.

03/16/2010 5:20PM ET

· $66.27

· $3.12

· 4.94%

Cliffs Natural Resources was on the upswing Tuesday after JPMorgan Chase and Deutsche Bank analysts raised their price targets on the Cleveland-based company, citing its structural improvements and higher-than-expected iron ore settlements.

According to Michael Gambardella of JPMorgan Chase, Cliffs Natural Resources ( CLF - news - people ) should move higher as "the market begins to discount the potential for a settlement near (if not above) our forecasts." Gambardella, who raised his price target to $83 from $60, says that JPMorgan Chase's own Latin America metals and mining analyst Rodolfo De Angele expects iron ore fine prices to increase by 65% year-over-year in 2010, and pellet price to jump 85%.

Deutsche Bank analyst Jorge Beristain reiterated his "buy" rating and raised his price target to $85 per share, up from $65. According to the analyst, the company will continue to gain on "increasing potential for higher-than-expected annual iron ore settlements and Cliffs' transition to global diversified miner status."

Beristain is particularly bullish about Cliffs structural improvements including "increasing international iron ore exposure, recovery at its core coal business and the longer-term diversification into chromium agur."

While iron ore production is what drives performance at Cliffs bread and butter, Beristain says that increasing coal production could lead to a "more meaningful representation of this new business" with coal representing as much as 15% of total sales for 2010.

Unlike Beristain, Gambardella says that Cliffs needs to "grow its coal business, or exit it." He expects the company to sell, "given the significant expenses it will need to incur to develop its recently acquired chromite deposit."

Though Beristain is keeping his 2010 EPS forecast unchanged at $5.55 per share, he is raising his 2011 forecast to $7.23 per share. Gambardella raised his 2010 EPS estimate to $8.60, up from $4.55, and lifted his 2011 EPS forecast to $10.50 from $7.50 "to reflect higher iron ore and coal price forecasts." Analysts polled by Thomson Reuters expect North America's largest iron ore pellet producer to earn $4.64 per share in 2010 and $6.33 per share in 2011.

Shares of Cliffs Natural Resources trekked to $66.97, their highest price in more than a year, then slid back to a gain of$3.12, or 4.9%, to $66.27 in Tuesday trading.

Other metal mining companies were rising on Tuesday, too. BHP Billiton jumped $1.18, or 1.8%, to $67.02; United States Steel ticked up $1.80, or 3%, to $62.49 and Vale gained 71 cents, or 2.4%, to $30.87.

-sg

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