A dividend cut is looming for Cliffs Natural Resources Inc., warns Wells Fargo analyst Sam Dubinsky, who sees further downside in the stock as iron ore prices deteriorate further.

He cut his price target range to $7-$10 (U.S.) from $12-14 while reiterating an "underperform" rating.

Mr. Dubinsky believes a "deep restructuring" would be the only saving grace for the company. But even then he remains doubtful.

"While we believe Cliffs will be able to have certain debt covenants lifted, we see risk the company may need to cut its dividend," Mr. Dubinsky was quoted as saying byStreetInsider.com. "At today’s spot iron ore pricing, we estimate Cliffs is burning about $80-million in cash including capital expenditures and about $220-million including dividend payments. We view the dividend as unsustainable unless pricing recovers to $100-$110/MT or assets are sold."

Shares in the company are down nearly 2 per cent at $15.31 (U.S.) at the opening of trade today.