Goldman Sachs has reiterated its Buy rating on Cleveland-Cliffs (NYSE:CLF) and maintained a $15.00 price target even after the company reported fourth-quarter results that fell short of consensus expectations. The stock was trading at $14.73 at the time of the report, just under Goldman’s target, and has posted a substantial six-month price gain of 54% based on InvestingPro data.
Earnings and operating performance
Cleveland-Cliffs reported an adjusted EBITDA loss of $21 million for the fourth quarter, compared with a FactSet consensus that expected a $17 million loss. Reported revenue was $4.3 billion, below the $4.6 billion analysts had forecast. The shortfall was driven by a combination of weaker volumes - 3.8 million net tons in the period - and a decline in realized pricing, which fell by $39 per ton.
On a trailing-12-month basis, InvestingPro data show the company produced a negative EBITDA of $236 million and registered a deeply concerning gross profit margin of -4.94% over the same period. These measures underscore the profitability challenges the firm has faced across recent quarters.
Forward outlook and Goldman Sachs’ view
Management has flagged the fourth quarter of 2025 as a likely trough in quarterly profitability and is projecting an improved macroeconomic environment to help performance rebound in 2026. Goldman Sachs highlighted that Cleveland-Cliffs shares have outpaced the S&P 500 by 10% year-to-date and had a 7% outperformance in the five trading days prior to the earnings release.
Goldman analyst Mike Harris identified several issues that investors will focus on during the company’s follow-up conference call. These include management’s expectations for realized pricing in the first quarter of 2026 and for full-year 2026, the company’s options for further deleveraging should free cash flow recover more slowly than anticipated, and potential value creation tied to the memorandum of understanding with South Korean steelmaker POSCO.
Balance sheet and leverage
InvestingPro flags Cleveland-Cliffs as operating with a substantial debt load. The company’s debt-to-equity ratio stood at 1.47 in the most recent quarter. Credit rating actions reflect this leverage: S&P Global Ratings lowered its issuer rating on Cleveland-Cliffs to B+ from BB-, noting that debt levels have climbed materially following the Stelco acquisition and amid softer market conditions. The company’s debt-to-EBITDA ratio rose sharply to 20.5x in fiscal 2024, up from 2.3x the prior year, illustrating how leverage metrics deteriorated over the period.
Goldman Sachs signaled that despite a constructive view on 2026, the near-term reaction could be negative - the firm expects Cleveland-Cliffs shares could underperform the sector in the next trading session following the Q4 miss if investor sentiment cools.
Analyst revisions and market reaction
InvestingPro analysis shows five analysts have trimmed earnings estimates for the company ahead of the report, with consensus EPS projected at -$1.96 for fiscal 2025. In the days around the earnings release, sell-side coverage moved in mixed directions: Seaport Global Securities downgraded Cleveland-Cliffs from Buy to Neutral on the basis that the stock’s price exceeded the firm’s $13 price target, while KeyBanc shifted its rating from Overweight to Sector Weight, citing valuation concerns and some modest downward revisions to estimates for late 2025 and 2026.
In contrast, Morgan Stanley upgraded the stock to Overweight following the memorandum of understanding with POSCO, citing that the deal represents a potentially meaningful strategic opportunity.
Corporate governance update
Cleveland-Cliffs also announced a board appointment. Edilson Camara, the former CEO of Egon Zehnder, will join the company’s Board of Directors and will serve on the Compensation and Organization Committee, bringing leadership experience from the global executive search and advisory firm.
Where investors may focus next
Key items likely to drive investor attention in the near term are management’s detailed guidance on realized pricing and volumes for early 2026, the pace and mechanics of any deleveraging if free cash flow does not rebound as expected, and progress or concrete terms related to the POSCO relationship. Given the company’s leverage metrics and negative trailing profitability, those factors will be central to assessments of the firm’s path back to sustained positive cash generation and margin recovery.
For readers seeking more granular valuation, profitability and strategic analysis, a Pro Research Report and additional ProTips are available via InvestingPro, which also provides the Fair Value assessment referenced in relation to the stock’s current market level.