Boston, MA 07/04/2014 (wallstreetpr) – Cliffs Natural Resources Inc (NYSE:CLF) is an international mining and natural resources company with more than $2.5 billion in market value. The company is soaked in a proxy fight with one of its largest shareholders, which has taken an activist approach to push for a management shakeup in the company.
However, as the company fights off attempt by an activist shareholder to gain control of its board of directors, some analysts are already raising a red flag about the company’s stock price strength. FBR Capital, through its analyst Mitesh Thakkar, issued a bearish note on the stock in an apparent demonstration that things are not likely to get better for the company any time soon.
The analyst chopped the price target on the stock to $20 per share, down from $25. In the downgrade note, the analyst cited poor iron ore prices that make it difficult for the company to realize big revenue gain.
However, Thakkar also noted some positive developments in Cliffs Natural Resources Inc (NYSE:CLF) such as planned reduction on costs through 2014 capex adjustment and idling of unprofitable plants. The company is also working towards its financial flexibility to avoid cash trap in the future.
Proxy fight continues
Casablanca Capital is pushing for big changes in the management of Cliffs Natural Resources Inc (NYSE:CLF). The end game for Casablanca in the proxy fight is to double dividend payout to shareholders, replacement of the CEO, spinoff of international assets and conversion of U.S. assets to master limited partnership. As such, the company is fighting hard to gain control of the board of Cliffs Natural Resources to push forward its agenda.
Casablanca owns 5.2 percent stake in Cliffs Natural Resources, making it the fourth-largest investor in the company.
Full control
Although Casablanca has been allowed three seats in the board of directors of Cliffs Natural Resources Inc (NYSE:CLF), the investor rejected the arrangement claiming that it needs full control of the board to lead the changes it wants to see in the company. As a matter of urgency, the investor is interested in the ouster of President and CEO Gary Halverson.
