FBR Research Reiterates an Outperform on Cliffs Natural Resources (CLF) Raises PT & Estimates

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February 1, 2010 10:35 AM EST

FBR Research reiterates an Outperform rating and raises price target on Cliffs Natural Resources (NYSE: CLF ) from $41 to $54.

FBR analyst says, "This morning, we are raising our iron ore benchmark price to 121 c/dmtu (a 25% increase over 2009 levels from 10%), increasing our 2010 estimates by about 30%, providing a preliminary $4.10/share value for Freewest Resources , and increasing our price target to $54 per share (excluding Freewest). Global steel utilization and new blast furnace re-starts at Severstal and U.S. Steel are the main reasons for increasing our iron ore price, as well as providing indications of stabilizing CLF's North American volumes...With the 27% pullback since January 11, the stock trades at 5.4x our new 2010 EV/EBITDA estimates versus our coal companies at 6.1x times. The main risk to the story is linked to a significant slowdown in China's ore imports, lower domestic steel capacity utilization, and cost pressures from dollar depreciation...We are increasing our 2010 iron ore price forecast to a 25% YOY increase from 10%, reflecting tightening iron ore fundamentals and global steel production capacity utilization remaining above 70%...While excluded from our price target, we believe the recent acquisition of Freewest Resources Canada could be worth about $4.10/share for CLF shareholders, and it provides decent upside optionality for long-term investors. Our valuation is very sensitive to underlying assumptions and ranges from $0.03/share to $13.96/share...We are increasing our 4Q09 EPS/EBITDA estimates to $0.39/$148.4M from $0.17/$113M to reflect increased met coal volumes, lower costs, and realizations at the high end of the guidance range. We are also increasing our 2010 EPS/EBITDA estimates to $3.49/$934M from $2.56/$746M, primarily to reflect our higher commodity price expectations."

To see all the upgrades/downgrades on shares of CLF, visit our Analyst Ratings page.

My question is: If FWR is worth 4,10$ then how much is worth SPQ? It seems that SPQ is worth at least 0.2$? What is your opinion about this?