Shares of Cleveland-Cliffs Inc. (CLF) climbed about 1% to trade near $12.30 on Tuesday after Wells Fargo upgraded the steelmaker to Overweight from Equal Weight and raised its price target to $14 from $12.

Analyst Timna Tanners said the company's earnings could "materially exceed" current Wall Street forecasts. She pointed to second-half 2026 and 2027 EBITDA as the periods where the upside is most likely to materialize.

Wall Street currently expects roughly $1.3 billion in combined second- and third-quarter EBITDA this year, with the 2027 consensus sitting near $2.3 billion. Both figures trail well behind the company's record 2021 result. For context, Cleveland-Cliffs posted $5.3 billion in EBITDA in 2021, its best year on record, when steel prices peaked around $1,900 per ton.

Steel Prices Are Climbing Again

Benchmark steel prices started 2026 at around $900 per ton and have since risen to about $1,300 per ton, giving the company more room to earn. Wells Fargo noted that hot rolled coil lead times are near pandemic-era highs, with buyers having trouble sourcing material fast enough.

U.S. landed hot rolled coil prices in Houston have jumped about $235 per ton since the Iran conflict began, while Southeast Asia prices, often used as a global benchmark, rose only $35 per ton over the same stretch, a divergence that shows U.S. prices climbing far faster than the global benchmark.

Tanners described the upgrade as a tactical call rather than a long-term bet. She believes the steel pricing cycle is close to peaking, but argues that Cleveland-Cliffs has not yet caught up to the benefits of higher prices.

A Rocky Setup Ahead of New Competition

CLF shares traded as low as $11 last week, down about 5% from levels seen before President Trump backed a new steel project in Iowa. Mesabi Metallics is planning a $15 billion fully integrated steel facility there, which could produce eight or nine million tons of finished steel a year once it is running.

That output would represent a substantial share of the U.S. market, which currently produces 80 to 90 million tons annually and imports another 20 to 25 million tons. New supply on that scale could either replace imports or crowd out existing producers, although the plant remains years away from completion. For now, Cleveland-Cliffs trades on near-term EBITDA rather than future competition.

Despite the upgrade, analyst sentiment toward the stock remains cautious overall. Only 25% of analysts covering Cleveland-Cliffs currently rate the shares a Buy, well below the 55-60% Buy ratio typical of S&P 500 constituents — a backdrop that makes this upgrade stand out. The number is moving in the right direction, however: back in the summer, just two analysts had a Buy rating on the stock, compared with four now. The average price target across analysts sits around $13, up from about $12 a year ago, leaving Wells Fargo's new $14 target above the current street average.

Cleveland-Cliffs is set to report earnings in 13 days — the next checkpoint for how results stack up against those expectations. The company's most recent quarter showed revenue of $5.2 billion, matching estimates, alongside a per-share loss of $0.20, just shy of the expected $0.19 loss.

Wells Fargo also flagged costs as the top concern raised by management teams last quarter. The firm continues to prefer aluminum stocks and copper producer Freeport-McMoRan over steel as its longer-term sector picks.

Source: CoinCentral