Jefferies Downgrades Cleveland-Cliffs on US Steel Competition Concern

On May 28, Jefferies analyst Christopher LaFemina downgraded Cleveland-Cliffs Inc. (NYSE:CLF) to a ‘Hold’ from a ‘Buy.’ The analyst also cut the price target to $6 from $10. The downgrade comes as the stock tanked 39% year to date, an underperformance that has seen it trade close to a 52-week-low.

Jefferies Analyst Downgrades Cleveland-Cliffs on US Steel Competition Concern

An experienced day trader at a modern trading workstation, looking intently at changing stock prices and reviewing portfolios.

Additionally, the downgrade and price adjustment underscore’ Jefferies’ concerns over the potential impact of significant investment in the US Steel sector. Nippon has proposed a $14 billion investment in US Steel’s operations. LaFemina has warned that investments in US steel could hurt other steel producers.

Given its high leverage, Cleveland Cliffs is the most susceptible to changes in US Steel pricing. Consequently, the Jefferies analyst insists the company’s outlook remains uncertain, given increased competition in the market. The report does not specify when changes in the steel market will happen, but Jefferies expects Nippon’s investment to have long-term effects. Cleveland-Cliffs’ stock price could be impacted as investors react to higher industry investment and capacity. The company has a debt-to-equity ratio of 1.22, and analysts predict a loss of $2.20 per share in 2025.

The company delivered first-quarter 2025 results that missed estimates. It posted a net loss per share of $0.92, wider than the expected loss per share of $0.67. Revenue in the quarter totaled $4.63 billion, below the $4.68 million that analysts predicted. Following the wider-than-expected net loss, Cleveland Cliffs has started taking steps to return to profitability. It has already idled non-core assets and considers asset sales to generate value.  The company plans to restart one of its blast furnaces in 2026 to meet automotive steel demand.

Cleveland-Cliffs is a steel producer known for its flat-rolled steel and focus on the automotive industry. It is involved in mining iron ore to produce finished steel products like sheet steel and other vehicle components.

While we acknowledge the potential of Cleveland-Cliffs Inc. (NYSE:CLF) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CLF and that has 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None.