Cleveland-Cliffs Inc. (CLF) is staging a recovery Thursday after getting knocked down by a downgrade that sent shares tumbling the previous session. It's the classic post-downgrade bounce, where investors decide maybe things aren't quite as bad as Wednesday's sell-off suggested.

What Triggered the Downgrade?

KeyBanc Capital Markets analyst Philip Gibbs pulled the trigger, downgrading Cleveland-Cliffs from Overweight to Sector Weight. His reasoning? The big catalysts that could have pushed the stock higher have essentially already happened, and the company is dealing with somewhat higher costs linked to a richer product mix.

Gibbs pointed out that the current valuation already accounts for upcoming non-core asset sales and potential strategic joint ventures with POSCO, South Korea's largest steelmaker. Sure, a POSCO deal could be beneficial, but the analyst noted there's still not much clarity around what that would actually look like.

The financial outlook took a hit too. Gibbs now expects fourth-quarter EBITDA to come in at a $22 million loss instead of his earlier $63 million profit forecast. The culprits? Lagging spot steel prices and those higher costs creeping in. Looking further ahead, his 2026 EBITDA estimate dropped from $1.63 billion down to $1.33 billion.

The Bigger Picture on Analyst Sentiment

KeyBanc isn't the only firm weighing in lately. Wells Fargo upgraded Cleveland-Cliffs from Underweight to Equal-Weight on Nov. 14, bumping their price target from $11.00 to $12.00. Citigroup kept a Neutral rating on Nov. 11 with an $11.00 target, down from $12.00. KeyBanc had maintained an Overweight rating on Nov. 10 before this week's downgrade, though they'd already cut their target from $15.00 to $13.00. And Goldman Sachs maintained a Buy rating on Oct. 31, raising their target from $14.50 to $16.00.

Shares were trading up 1.83% at $12.25 on Thursday.