The Report Killing Cliffs Natural Resources Today

In a report published Wednesday, BMO Capital Markets analyst Tony Robson downgraded shares of

to Underperform from Market Perform with a price target slashed to $4 from a previous $8 as the iron ore oversupply is "not letting up." Shares were down more than 4.5 percent at $4.59 in Thursday's pre-market session. According to Robson, Cliffs new CEO, Lourenco Goncalves, has done an excellent job in selling off assets and reducing liabilities, however, these changes may be a year too late. The analyst added that net debt to EBITDA ratios are expected to remain high throughout 2015 and reaching 20.9x in 2016. Robson said that the company's cash flow is under "strong pressure" from low iron prices. The company's Australian iron ore, once a strong cash flow generator, is expected to generate little if any cash while the company's U.S. pellets operations are becoming more linked to global prices during a period of pricing lows. The analyst estimated net free cash flow is expected to be $10 million in 2015, dipping to negative $200 million in 2016, inclusive of net interest expense of approximately $170 million per annum.