Cleveland-Cliffs stock has upside to $26: Morgan Stanley

Cleveland-Cliffs Inc (NYSE: CLF) has been in a sharp uptrend since early November but a Morgan Stanley analyst is convinced that it’s still not out of room to run just yet.

Cleveland-Cliff stock could gain another 35%

On Thursday, Carlos De Alba bumped his rating on this stock to “overweight” and raised his price objective to $26 – about a 35% premium on its previous close.  

He’s bullish primarily on the recent increase in fixed annual steel price contracts. The note reads:

Last month, the mining company revealed an increase in annual price contracts for its biggest end market – auto customers. Cleveland-Cliff stock has gained more than 80% in the past couple of months.

Cleveland-Cliffs stock could benefit from Q4 results

Cleveland-Cliffs is set to report its Q4 results next month. Consensus is for it to lose 27 cents a share this quarter versus an EPS of $1.78 a year ago. Still, Carlos De Alba wrote:

He’s also constructive because the company is committed to reducing debt to strengthen its balance sheet.

At about 4.5 times, Cleveland-Cliffs stock is currently trading well below the average of its multiple over the past five years.