Cleveland-Cliffs (NYSE: CLF) reported a relatively mundane first quarter of 2024, with revenue falling short of consensus estimates by $130 million. Management attributed this performance to headwinds in service center destocking, geopolitical challenges in the plate steel market, and a shift in production mix towards less value-added products.
Despite these challenges, the company maintained its focus on cost-saving initiatives and reiterated its ability to reduce unit costs by $30 per net ton in fiscal year 2024. The company also secured a major Department of Energy grant of $575 million to support its decarbonization projects, including the conversion of its Middletown DRI EMF facility to a blast furnace.
Cleveland-Cliffs remains optimistic about the long-term demand for its steel products, particularly in the automotive and infrastructure sectors. The company expects to benefit from the growing adoption of hydrogen-produced steel by automotive OEMs and the Biden administration’s focus on investing in infrastructure projects.
In addition to its cost-cutting and decarbonization efforts, Cleveland-Cliffs has also been active in returning capital to shareholders. The company repurchased $608 million worth of shares in Q1’24 and initiated a $1.5 billion share repurchase program.
Given the company’s long-term growth prospects, cost-saving initiatives, and shareholder-friendly policies, analysts recommend buying CLF shares with a price target of $28.05 per share, representing a potential upside of over 10%.
