B. Riley Cuts CLF Stock Price Target

CLF call buyers have targeted the October 10 strike in recent weeks

by Karee Venema

Published on Oct 1, 2019 at 9:47 AM
Updated on Jun 24, 2020 at 10:16 AM

B. Riley FBR cut its Cleveland-Cliffs Inc (NYSE:CLF) price target to $13 from $16, with the analyst in coverage citing an "evolving macro and price environment" for the mining company, pointing specifically to a sharp decline in Atlantic pellet premium. Nevertheless, the firm maintained its "buy" rating on CLF, with the analyst saying the stock is attractive, and has the potential for "substantial upside."

Most analysts are bullish on CLF stock, with four of seven in coverage maintaining a "strong buy" rating, and not a single "sell" on the books. Plus, the average 12-month price target of $10.20 is a 41.3% premium to last night's close at $7.22.

It looks as if options traders share in this optimism. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CLF's 10-day call/put volume ratio of 17.38 ranks in the 100th annual percentile, meaning calls have been bought to open over puts at an accelerated clip.

The October 10 call, in particular, has been a popular target among call buyers in recent weeks, but given its out-of-the-money status, it's possible shorts are using the options to hedge against any upside risk. There are currently 99.2 million CLF shares sold short, which accounts for more than 37% of the stock's available float.

Looking at the charts, CLF hit its most recent high of $11.61 in mid-July, before spiraling down to an 18-month low of $6.64 on Sept. 3. The shares rebound off this low was rejected near $8.50 -- a 38.2% Fibonacci retracement of this sell-off -- which sent them on their next leg lower. Today, Cleveland-Cliffs stock is slightly higher, up 0.6% at $7.25.


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