On Friday, an analyst team at Macquarie Capital led by Anthony Young downgraded shares of Freeport-McMoRan (FCX) and Cliffs Natural Resources (CLF) to Neutral from Outperform. Shares in both companies have been on a steep decline for some time as the prices of commodities -- ranging from oil to metals -- have also been on a steep decline.
In addition to downgrading Freeport, Young also lowered its price target to $7.30 from $18. Shares of the company were down 71% for 2015 and are currently trading around $5.60. Earlier this week, Moody's announced that it was reviewing the Arizona-based natural resources company's unsecured debt, which is currently rated Baa3. If downgraded, the company's debt would be in "junk" status. Freeport is well aware of its financial troubles and the company announced cost cutting measures in December, which included suspending its divident and curtailing production.
Meanwhile, Young lowered the price target on Cliffs Natural Resources to $1.60 from $6, citing weaknesses in the domestic steel market. The Ohio-based supplier of iron-ore pellets announced in December that it was selling its remaining coal business to Seneca Coal Resources for $268 million. Shares of the company were down 77% for 2015 and are currently trading around $1.70.
With today's downgrades, Macquarie appears to be confirming what the market has already known.